Keys to Insurance for Real Estate Investments

Key # 1 –More Than One Insurance Broker

An insurance broker represents many carriers but the usual Geico or State Farm agent represents only one. Additionally, not every insurance broker write policies with every carrier so each one might have their own strengths and weaknesses.

Key # 2 – Accurate Kind of Policy

◾Landlord ($): When your property will be rented out to residents
◾Vacant ($$): For unoccupied properties that you are repairing cosmetically for resale.
◾Builder’s Risk ($$$): For unoccupied properties that you will be majorly renovating

Key # 3 – Name of Insured Must Match How the Property is Titled on the Deed

By far the largest mistake investors make. Whomever the Deed proclaims as the title holder MUST be the precise name of the insured on the insurance policy.

Key # 4 – Adequate Coverage

◾Damage: Centered on replacement expenses and contingent on your precise circumstances, you might choose a diverse amount then what the replacement cost estimator concludes.
◾Lost Rent (for Landlord Procedures): Set at the gross rent you presume to accumulate.
◾Liability: Ask your insurance broker for the suitable amount and don’t forget to own your real estate in a limited legal responsibility entity.
◾Pets: If your tenants have any animals, be sure you also have pet coverage in your policy (and the pet is not on the uninsurable list) or the renter has paid for renter’s insurance and that policy includes pets.
◾Flood: Even if you are not in a flood zone, if you are near water of any kind, you might want to get flood insurance. Just ask people from Nashville, TN what occurred in May 2010. Or people on the East Coast during Hurricane Sandy. Flooding happens more than you might guess.
◾High Deductible: Ponder a higher deductible since you almost certainly won’t file a claim below $5,000 anyhow.

Key # 5 – Don’t Cheat

Insurance companies make cash two ways; (a) Collecting dividends and; (b) NOT paying claims. Don’t give insurance companies a reason to get out of paying out your claim.