All Forum Posts by: John Mocker

Jim,

The temptation is to just turn over the proceeds of the Insurance and trust the contractor to do all the necessary work.  If it was my property, I would ask the contractor for a detailed estimate with all the work to be done and the final cost.  Then draw up a contract that spells out what is to be done, what the cost is, what the requirements are, etc.   If you are requiring the work to be done in a specified time frame you should spell out the penalties if not completed.   If this is a big job, you should discuss with your agent and/or attorney whether or not a Bond would be appropriate.   You should get proof of Liability, Business Auto, & Workers Comp. from the contractor before they start the job.   You may also want to require that they add you as an additional insured to their policy with 30 day notice of cancellation.  Further, a requirement in the contract that any subcontractors have to meet the same requirements may be a good idea.  Lastly, discuss with your attorney any other things you should build in to the contract (that they hold you harmless and indemnify you, that their insurance is primary and non-contributory, that they waive subrogation against you, etc..).  Some of these things I've mentioned may not be applicable or advisable but a good attorney should be able to advise you.  The contractor may not like it that you are requiring things but you need to protect yourself.  

** thought of one other thing.   Compare the Contactors quote against the Adjusters report on what damage they are paying for to make sure everything is getting done.   If the Adjuster did not give you a detailed report ask your agent for help in getting it.

Susan,

The Building coverage generally comes in two types:

  1.  Replacement Cost (RC) - cost to rebuild from the foundation on up.  It is independent of the purchase price.  I've seen rental homes sell for $75,000 but have a cost to rebuild of $300,000 or more.  The Replacement Cost varies based on the location.   Most companies have estimating programs to calculate what they require for the Replacement Cost.  

2.   Actual Cash Value (ACV) - is Replacement Cost less the Depreciation.  This coverage is more common on properties that can't be insured in the regular market (ie. bad condtion, vacant, etc.).   The disadvantage of the this coverage is that in a full loss or a partial loss, the company is going to deduct for deprecation.  The advantage is, because you are insuring lower limits, the cost is often cheaper.

Most policies have a built in Limit for Loss or Rents (may also be listed as Business Income).  Make sure that you have that coverage and if so, is the limit adequate.

For Liability, purchase the max you can get.  Most Dwelling Fire Policies max out at $500,000.  Take that option and then get an Umbrella policy.  That policy will pickup if the Liability coverage of the underlying policy is exhausted by a covered claim.  Generally it is sold in increments of $1,000,000.   If the agent you have can not get it for all your properties there are stand alone markets for the umbrella coverage.

The rates you quote would be very competitive in many areas.   The thing to check is, what is being covered (there are different levels of coverage) and what optional coverage is included.  If the policy is not "Special Form" for the Building, you should ask for quotes at that level. 

Some optional coverage that may be valuable for you (depending on the propery):

- backup of sewers & drains

- Ordinance & Law (if building codes require rebuilding differently)

- Personal Injury (Liability for Libel, Slander, ...)

Non Insurance Risk Management ideas that you can look into are:

- review your contracts

- require Tenants to have a Renters policy

- look at advantages of LLC for each property

- Pet policy (many companies will not write policies if certain breeds of dogs are at the property)

Dave, The first thing you need to determine is what caused the leak to start.  Was it just wear & tear or did something damage the roof first (ie.  wind, weight of snow/ice, hail, etc.).   After you know that, discuss it with your agent to make sure it is covered.   Know that, most agents are contracted with the companies they write for and may be required to report what they know about a property if it effects the risk going forward.   Since you will be repairing it either way, there should not be an issue of it effecting the future risks.  Hopefully the agent can give you a ballpark on what the change will be in the annual cost and you can weigh it against what you will get back in the claim. 

Alden,

Jason Bolt is correct.   We represent many companies that insure homes & rental properties in different states.   The norm is that the Replacement Cost Coverage extends to the roof.  Most policies that have the Replacement Cost endorsement included are written such that the company will only pay Actual Cash Value until the work is done and then they pay Replacement Cost. 

We write with Safeco as well and for the policies in our area and they have been a good company.  They are owned by Liberty Mutual.  

One thing to check for with any quote is, are they offering the same coverage as you have now.   Obviously the roof coverage is superior to what you have but are the other coverage the same or better.   If the policies are "Dwelling Fire" policies, you should check that the coverage is at "Special Form" (often that is referred to as a "DP3") form. 

Some times an agent or company will offer lesser coverage at at lower price.  If you get quotes at DP1 (offers the least coverage) or DP2 (name perils - better than DP1) the coverage is less than a DP3 policy.   You may enjoy the lesser rate but I would steer clear of DP1 unless there is no alternative as what's covered is very limited.  With DP2 policy, you should discuss with the Agent the savings vs. what you are giving up in terms of coverage to see what is right for you.

James,

First a note that the Insurance Market in TX for personal Insurance used to be dominated by a couple of companies.  I've heard that it has opened up somewhat but I would suggest talking to Agents in TX to see what your options are now. 

In the states we operate most, the pricing on the two families are generally less if insured on a "Dwelling Fire Policy" vs a Business policy.  Most companies that offer the Dwelling Fire policies will cover 1 to 4 family houses on those policies.  The two 4 family houses on the same property may or may not qualify depending on the company.   If not, you will want to insure it with a Business Owners or Package policy.  These are sometimes called Landlord policies.  The coverages included can vary between companies.  These type of policies are handled by agents that sell "Commercial" or "Business" Insurance.  For the Vacant land, see if any the policies (Dwelling Fire or Commercial) can extend Liability coverage to that land.

Make sure the named insured on the policy matches the title on the property. It can easily get confused if you have multiple properties in multiple LLC's or names.

Lastly, I recommend getting quotes for an Umbrella policy.  That type of policy provides an additional layer of Liability coverage (usually in $1,000,000 increments) that start if the primary policy's Liability limit for the location gets exhausted by a claim. 

Chris,

I strongly recommend you consult with an Attorney who is familiar with the local laws / cases involving this type of claim. 

Without knowing all the details this is some guesswork.  It appears that you have a faulty installation by Plumber C.  A failed inspection that both Plumber C and the prior homeowner should have been aware of (did the Red Tag generate notification from the City to the prior owner?)

In Contractors policies generally the policy does not pay for the costs of the Contractor repairing the faulty workmanship.  That cost they have to bear themselves.   The question will be on the ensuing damage that the faulty workmanship caused. 

You may need to put claims in to several parties (ie.  Plumber C for the damage that ensued, the homeowner for not revealing the red tag that would have caused you to fix it....).   The terms of the purchase and the real estate laws will impact the claim possibilities against the prior owner.   The case law will give some indication of whether or not Plumber C's Insurance can deny all of the damage or just the costs of repairing the line the dump line. 

All of the above make the consultation with an Attorney seem to be a logical first step.   After that there may be other things (Insurance dept, consumer Protection if the Plumber C was licensed, ...)

As Jason mentioned, the Insurance should be in the name of the person (s), or entity that is on the Title. Changing ownership to a Corp/LLC would involve a sale or transfer. You should examine your Mortgage docs and check with your Attorney to make sure that they will allow the transfer.

If you are able to transfer the Mortgage to the LLC and go to change the Insurance policy be sure to let the agent know if there are any LLC members other than yourself. Often the companies will be able to just change the name on the policy if there is no difference in ownership (ie. from your name to a single member LLC owned by you). In the case of a change in ownership (additional members in LLC) they may have to rewrite the policy.

Robert,

Here's a recommendation for the Phase 1:

   Anchor Engineering Services

   Glastonbury, CT

The do civil & enviormental engineering, surveying, etc.   If they don't do the Phase 1 they will be able to refer someone who does.    PM me if you need a phone no.

Guru,

One major difference between NH and FL for property insurance is the the Windstorm Pool in FL.   Because of the potential severe wind damage from hurricanes/tropical storms FL had to establish a Pool for Windstorm coverage.   Depending on your location you may have to buy a property policy (home/dwelling fire) and a separate Wind policy.   Flood Insurance is also a consideration for a FL property even if not in a High Risk Flood zone. 

The amount of rental allowed can be something that you should get spelled out with any quote.   That way if your situation changes with regard to the amount of rental you will know if you have to switch carriers.

I would first check with your NH agent to see if your current carrier in NH also writes in FL and if they will do Naples.   Another source for a referral to a FL agent would be the Property Manager or Homeowners Association in FL.   If neither of those produces an agent that you want to work with, we have a couple of Insurance Companies that began down in FL.  PM me and I will send you links to their websites. 

Maria,

What is covered and how the value of the damaged property is determined by the policy and the circumstances of the loss.   The first thing to determine is;  Is it Covered?   What caused the damage (wind, hail, fire, etc..) and is that a covered peril (cause of loss) in the policy?   Most policies do not cover wear & tear so if the roof just wore out, it will probably not be covered.

Second, you need to know:  How will the company value the damage?  It usually breaks down to Replacement Cost vs. Actual Cash Value (Replacement take away Depreciation).   Replacement Cost coverage does not take the depreciation into account so the age should not be a factor.   Actual Cash Value coverage on the building will definitely be affected by the age.

Each Insurance company has to file their own Underwriting Guidelines with each state so the effect of the claim will depend on the company.   State laws also impact what the Insurance company can do about the loss on your record.   Most of our companies will run a Claim report that will show claims on the address of the property to be insured and also claims that the proposed Insured had so it will probably show up.

One loss should not prevent you from getting coverage.  I know of at least 2 companies that write policies in all three states and that can handle the 1 claim situation.  Pricing may not be as good as it would have been without the loss.