All Forum Posts by: John Mocker

Tiffany,

Replacement Cost is based on cost estimating programs that use sq footage, # of baths, size of porches/decks, garage types, features (custom, builders grade, etc. for kitchen, bath) , basement finish, garage type, etc.   The programs estimate the cost to rebuild the structure in your area.   The Replacement cost does not take into account the selling price of the building or surrounding buildings.  

Tiffany,

The Declarations pages of a policy are the beginning of the policy and generally show the Limits, dates, and which policy forms and endorsements apply.  That would be a good first step but I would get the Sample (Specimen) forms so you know what the forms and endorsements actually say.

Rolanda brings up a good point for you to know, there are two ways that the Building can be valued after a loss.  The Replacement Cost (RC) (cost to rebuild with the same kind and quality) or the Actual Cash Value (ACV) (Replacement Cost - Depreciation). 

The advantages of Replacement Cost are that there is not any depreciation applied to partial losses and you get enough to replace the building after a total loss.  ACV is usually cheaper because the limits needed is lower.  On a partial loss there will be a deduction for depreciation.  Sometimes the rates for RC are less if the company does not offer ACV but has better rates.  

Tiffany,

The Actual policy usually is not available until after it is issued but they should be able to send you sample forms.  Have them send samples of all the forms and endorsements.  Those, plus the quote, should give you a close approximation of the policy. 

Tiffany,

Lynn's advise to start with your current agent is good.  As she explained, some companies will not write the rental unless they write your current home.   It would be a good Idea to also check with one or more independent agents and get comparisons.  I you have USAA or similar (Geico, Nationwide, State Farm,...) the agent may be limited to only what that company offers. 

Assuming that the Rental is a 1 – 4 family house (not in the rehab process) the policy you want is a Dwelling Fire Policy (individual companies may call it something different ie Landlord policy).Some of the things you need to insure:

- Liability (I recommend maxing this - $500,000 is max in most of our carriers but some go to $1mm)

- Medical Payments (Pays w/out determining fault - most carriers will max out at $5,000 but some go higher)

- Building (Look for "Special Form" coverage and Replacement Cost.)

- Contents(for the contents you include in the rental such as Appliances, Funiture, etc.)Look for "Special Form" & Replacement Cost as well for Contents

- Loss or Rents/Business Income (limit should be greater than your 12 mos. of rental income)

- Loss Assessment (if you are in a homeowners association you should look at this coverage)

The things to watch out for/avoid from an Insurance perspective are:

1. Homes with Underground tanks (in use or not)

2. Homes with Lead Paint

3. Homes with Knob & Tube or Aluminum Wiring

4. Homes with Fuses or under 100 amp service

5. Homes with Flat Roofs

6. Homes with Pools that are not fenced or that have diving boards or slides

7. Homes with prior losses (they will show up under a CLUE report of the prior claims)

    May not affect the new policy if over 5 yrs old or was due to Catastrophe

8. Homes with EFIS siding or Asbestos shingles or siding

9. Homes with Polybutylene Plumbing

10. Presence of Asbestos (pipe wraps, tiles, etc.), Radon, or other environmental issues

Serj,

The first thing that jumps out at me is the Family Liability limit.  My recommendation to my clients is normally to purchase the highest limit of Liability possible.  Most of our insurance companies offer max. limits of $500,000 (some go up to $1mm limits).  If this company does not offer higher limits you should consider an Umbrella policy  That policy will provide an additional layer of Liability above your homeowners Liability and your Auto Liability.   The policy is sold in $1mm increments.   Most Umbrellas require certain limits on the underlying policies (Home & Auto).  $100,000 may not be enough coverage. 

The next item to address is the Dwelling Protection.   What is important here is:

1. Is the Building covered for Replacement Cost (RC) or Actual Cash Value (ACV)

2. If it is covered for RC, is the $305,619 sufficient to rebuild the structure from the foundation on up.

3. If it covered for ACV, is the $305,619 equal to the RC minus depreciation

4. You also need to find out what losses are covered:

     - Is the Coverage "Special Form" (better) or is it "Named Perils".  If not Special Form

       you should get a quote to change that

5. The Limits for Other Structures, Personal Property, & Additional Living expenses are percentages

    of your Dwelling limit.  Most carriers will let you increase those if you need more coverage.  I

    would think about the Additional Living Expense limit.  Verify that it covers the loss of rents as well

    your costs to live elsewhere if you can not occupy the house. 

I would recommend that you put this out to a couple of experienced Independent agents in the area where the house is and see what recommendations they come in with.  Good Luck

Blake,

In our area, I have success with the Dwelling Fire policies with regional mutual companies.  If you contact the Oklahoma Professional Insurance Agents (PIA) or Oklahoma Independent Insurance Agents (IIA) they may be able to point out some of these types of companies and you can then see which agents represent them.   Good Luck. 

Blake,

I suggest you look to other agents.  The Allstate agent may be limited to only Allstate for the policy.  If you look to a number of agents you should have a better view of what's available in your area. 

Assuming that the condo is rented (not in the rehab process) the policy you want is a Dwelling Fire Policy (individual companies may call it something different ie Landlord policy).  In CT we have a couple of companies that use the owned condo form (HO 6) for the rented condos as well.  Some of the things you need to insure:

- Liability (I recommend maxing this - $500,000 is max in most of our carriers but some go to $1mm)

- Medical Payments (Pays w/out determining fault - most carriers will max out at $5,000 but some go higher) 

- Building (may be under Improvements & Betterments or Additions & Alterations).  Even though the Assocation insures most of the building elements, you as the unit owner usually own some of the elements (determined in the bylaws) such as cabinets, sinks, sheet rock, paint, floor coverings, internal electrical or plumbing, etc.  Look for "Special Form" coverage and Replacement Cost.

- Contents  (for the contents you include in the rental such as Appliances, Funiture, etc.)   Look for "Special Form" & Replacement Cost as well for Contents 

- Loss or Rents or Business Income (if there is a covered loss, you will probably also suffer a loss of rental income if the Unit can not be occupied during the repairs)

- Loss Assessment (may be offered on some forms.  Used for a claim if the association assesses the unit owners for a loss that would be covered on your policy.

Speaking of Assessments, you should find out if the Association is banking money toward the eventual upgrades (ie. roof, exterior, etc.).  If not, expect assessments when those need replacement.  The Management company may be able to tell you.

Matt,

In CT, the Cities/Towns often have the Tax Assessors info or where to find it on their site.   I did a quick search and it looks like there is a county site:

http://www.assessor.shelby.tn.us/content.aspx

If that doesn't work call the office and they should be able to tell you the info or send you a copy of the "Field Card" which normally would show the number of families.  Sometimes they charge for the copies.

Erick,

In most states, the Insurance company has to file their Underwriting Guidelines with the State Insurance Department.   If you received a written notice that they are not renewing, it should state a reason.   That is what you need to concentrate on.  If it says, the cancellation is due to the loss, that is the important issue.   If it gives another reason (ie. the status changed from occupied to vacant) that is a different issue. 

In CT, the Insurance company has to notify the client a set number of days prior to the expiration in order to Non-Renew and must state why it is doing that.   If MD Insurance department has an information line, I would call that first.   If you have insurance with another agent for your auto or a different property, they may also be able to give you some info on what the requirements are in MD about cancelling and non-renewing.  If that does not get you a satisfactory reply, seek an Attorney with experience in this area of the law.  

Hi Manuel,  we do write fix and flips.  Send me a PM and we see how we can help.