All Forum Posts by: John Mocker

Jon B.

Working with contractors without Insurance (General Liability and Workers Comp. at the minimum) is asking for problems:

1. The contractors work damages the rest of the structure.  What do you do?  Sue them (good luck, even if you win, will they have any assets to attached).  Have them repair the work.  Maybe.  But if the loss was caused because of their poor workmanship do you want to have them redo it. 

2. The contractor causes injury to someone visiting the property (instpector, delivery person, etc.).  If the contractor has no Insurance you are more likely to be drawn into a suit by the injured party,

3. an employee of one of the contractors is injured on the job site.  With the Contractor having no insurance again you are more likely to be drawn into an lawsuit.

I strongly recommend that you only use Licensed contractors with a good track record and with full insurance.  Have your contracts with those contractors drawn up by a qualified Attorney.  They should stipulate from an Insurance perspective that the Contractor provide you with proof of Insurance that:

    1. names you as an additional insured

    2. provides 30 day notice of cancellation

    3. Is primary and non-contributory

    4. waives subrogation against you

You also want an strong Hold Harmless and Indemnification Clause in the contract.

Mary,

I am not aware of a normal insurance product that would cover more than Replacement cost for most structures.  The thought is, if the structure is rebuilt, you would be in the same (or most likely better shape) than pre-loss.  

The value of the Land can cause the Loan amount to exceed the Rebuilding (Replacement Cost) in some areas (NY Metro area, LA, DC, etc).  It became a problem in CT for borrowers because the banks insisted on the loan amount for the Insurance.  Eventually, laws were passed that required the Banks to accept Replacement Cost coverage.

Suppose you loan $500,000 on a property.  The house is 1500 sq ft and has a rebuilding cost of $300,000.  It burns the ground and is rebuilt with the $300,000 coverage.  Wouldn't you be in at least the same place after it was rebuilt (barring changes in he local market I would guess the value of the property with an newly built house to be greater than before) 

Ryan,

From an insurance perspective:

1, discuss the claim scenario (Tenant vandalizes the unit) with your agent and see how, potentially, your policy would respond

2. require that your Tenants purchase Renters Insurance and have you named on the policy so you receive notice of cancellation.  Have the requirement in your lease with the ability to purchase that coverage and charge back if they let it lapse 

Jefferey,

Do you have your Real Estate License.  If so, then you are a real estate agent.  If not, it is harder for the underwriters to understand.  When they hear Wholesaler they think in the wholesalers who supply retail stores with Products.  

Although Philadelphia is only requiring you to get General Liabilty, I think you have a bigger exposure to Professional Liability (E&O) insurance. There are some markets that will write both together and if affordable, that would the way I would recommend going. I will check to see if they handle Wholesalers. If you can not find coverage with the agencies you have contacted, PM me and I will let you know the companies that we use that might do it.

Because of your making payments to the owners potentially, I would look into commercial crime coverage and cyber liability.  Too many stories of hacking to get at wire transfers, etc.

Michael,

If the builder and/or HVAC contractors gave you proof of Insurance.  You can open a claim directly with their Insurance company.  You may want to approach the contractors and let them know you plan on putting in a claim and see if that prompts them to offer a compromise.  You should also, if your Homeowners policy paid for the remediation, find out if they are going after the Contractors.  If so, you may be able to piggy back on that claim.  If not, find out why they are not pursuing it.  That reason may give you a clue on what your potential success will be.  

Marshall,

Have you submitted a claim to the Association or your own condo coverage.   If you have not submitted it to the Association, review your bylaws and condo declarations.  The leak may be from a Common element.  Those common elements are the responsibility of the association's  insured by them.   Even if the Association's coverage denies it also, the Association may have the responsibility to fix it.  

jay

Without seeing the policies it sounds like the policy you have is on a "Claims Made Basis"  in that type of policy, the policy in force when the claim is made.  This differs from the more common "Occurrence basis" where the policy in force at the time the claim occurred, is the policy that responds.  With the Claims Made policies (often used in professional liability, products liability, etc.), when you end the coverage, you need to purchase extended reporting coverage (aka Tail coverage).  That allows you to submit claims that happened before the business shut down but were not reported to you until after.  

PM me and we can speak offline about it.  

The Builder should have "General Liability" (bodily injury & property damage liability).  If you used an architect they may have copies of the coverage.  Also, if the Builder had to pull permits from the town, they may have had to show proof of insurance and that may be on file.  Some towns only look for the the proof of Workers Compensation but if they filed proof, it may lead you to who their insurance agent is.

The Builders Risk policy covered the property during construction for fire, theft, vandalism, etc. so it would not apply to these claims. 

Aaron,

If you have the info on who insured the Builder you could file a claim.  They will probably not cover redoing the poor workmanship but there may be some coverage for the ensuing damage (garage light repair).  

If you do not have their Insurance info have your Insurance agent send the Builder a certified letter indicating that you be making a claim against their insurance for the damage.  Indicate that, if they do not inform the insurance carrier of this, they are jeopardizing their coverage as the Insurance company will find out when you file suit or your Insurance company goes against their company in subrogation.  If there are only a couple of Agents in your area you could call around to see who insures them and send their agent a copy of the certified letteer.

Britt,

Just a reminder, once you rent it out and are no longer living there, the home is not owner occupied. Most Homeowners Insurance policies require the house to be owner occupied. Check with your agent to see if you need to rewrite the policy and what the new rate will be as a STR.