High 5 ideas for working with actual property traders


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1. Understand the limits of personal leadership

“In a tenant-occupied rental, the first choice is often to write the property on a personal DP-3 line, which usually comes with a liability limit of $ 300,000,” he said. “And for customers who want a higher limit of liability, you can also opt for a personal umbrella. This is simple and can work well in some situations. But there are many reasons this approach can fall short.

“What happens if the property is vacant between tenants? Or if the property undergoes a cosmetic renovation before a tenant is placed? Many forms of living do not offer any space for vacant objects or objects in need of renovation.

“How do you manage your portfolio when you are buying and selling more and more properties? Most private insurances limit the number of rental properties a person can take with them. In addition, if the investment property is owned by an LLC, trust, or other legal entity not included in your home and umbrella policies, coverage may not be provided for incidents that occur on the property. Property owned by a company may not be insurable under a housing policy at all. So if your client has more than four or five properties and property titles are not in their personal name, it just doesn’t work. “

“The bigger problems from the point of view of coverage arise from the liability risks.”

2. Watch out for harmful liability risks

“Home line liability limits typically have defense costs within coverage limits,” he noted. “With a limit of $ 300,000 to $ 500,000, defense costs can severely limit the amount that can be used to make a withdrawal.

“Many guidelines for private lines contain a ‘Total Pollution Exclusion’. This means your customer will be exposed to exposure if they have a tenant who becomes sick or, worse, dies from established carbon monoxide poisoning. Since an umbrella policy follows the exclusions of underlying liability, that exclusion means that you must defend yourself in the event of an unlawful death.

“Some residential coverage policies also include a ‘Total Business Venture’ exclusion, which could exclude damage or lawsuits on a rental property because it is generating or intended to generate income.

“And also note the exclusions of liability or breed restrictions for dogs. Many private line policies list 12-14 of the most vicious breeds that are excluded from cover. While some investors do not allow dogs as part of their rental agreement, it can nonetheless leave a risk for the unexpected on the property. “

3. Use a commercial form

“I would recommend treating real estate as investment property for the business it is and insuring it on a business policy form,” he offered. “The form for commercial real estate is not only written in such a way that it properly protects the landlord with coverage such as loss of rent, but commercial liability insurance usually also solves the exclusions listed above. And with dedicated limits per object starting at $ 1 million per event (with defense costs outside that limit), a top policy can often be unnecessary.

“Written reporting on a commercial form also helps isolate an investor’s personal wealth from an investor’s business assets. Imagine an investor being sued for the wrongful death of one of their tenants. The lawsuit could easily exceed the $ 300,000 limit typical of a private insurance policy. If umbrella liability insurance collectively insures everything that the investor owns in the private and investment business, the injured third party could pursue the private assets of the investor. On the other hand, an investor causes a car accident that kills another driver. If these assets are lumped together, the driver’s family’s lawsuit for wrongful death can come after the investment objects. “

4. Take stock of market and service challenges

“After several years of frequent and catastrophic losses, it is becoming increasingly difficult to find the risky carriers that come with the insurance of investment properties,” he noted. “Freight forwarders are limiting their capacity, especially in areas prone to windstorms and wildfires, and are concerned about the added risk associated with tenant-occupied, vacant and renovated properties. All of this has created uncertainty about who else is playing in the area and difficulty finding competitive prices to win an account.

“Real estate investors can also present real estate agents with unique challenges that go beyond finding the right cover and carrier. Frequent changes in a property’s occupancy can mean that coverage is canceled and rewritten every few months when a renovation is complete and the site is vacant, then when a vacant property wins a new tenant or is sold. Whenever an investor buys a new property, you have to start the application process from scratch every time. Canceling policies, issuing refunds, putting together adequate coverage across multiple carriers, and managing multiple annual renewals as the portfolio grows is a headache. “

5. Find solutions to these challenges

“The answer to these challenges for brokers, and in turn their real estate investor clients, is the REInsurePro program,” he said. “REInsurePro’s real estate investment program is drawn by an arsenal of ‘A-rated’ carriers with an appetite for the unique risks of these properties, even in disaster-prone areas. Through extensive cooperation with national surplus and surplus carriers, REInsurePro was able to set up a flexible and affordable program for every type of property investment.

“The monthly report form is structured for the frequently changing portfolios of investors and offers the possibility to seamlessly switch between occupancy status every month without having to cancel and rewrite policies. Because real estate investors are able to leverage their industry relationships and typically don’t pay retail prices for repairs and supplies, REInsurePro allows investors to get replacement cost coverage at a much lower cost per square foot than many insurers ($ 70) and has no coverage-insurance penalty of or more than $ 50 per square foot.

Better still, REInsurePro gives agents direct access to offer and tie coverage through our market-leading technology platform, and adjusts coverage to meet credit requirements in the event of floods, earthmoving, equipment failures, regulations or laws, and more. Then take care of your customer when his portfolio changes every month, with all its properties in a reporting and billing plan. You avoid the annoying pursuit of different renewal dates, as the insurance cover remains valid until cancellation. “

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