Vacant Home Insurance
Builders Risk Insurance
Saturday, December 17th, 2011 | Builders Risk, California, Detroit, Flint, Georgia, Illinios, Indiana, Insurance, Landlord Insurance, Manufactured Home, Maryland, Michigan, North Carolina, Ohio, Real Estate, Vacant Home Insurance | No Comments
Example of a Builders Risk policy offered by our agency.
| Product | Builders Risk |
|---|---|
| FEATURES |
|
| COVERAGES |
|
| DEDUCTIBLES | Standard Residential- $500 Standard Commercial- $1000 Higher Options available |
| AVAILABLE BY ENDORSEMENT | Contractors Equipment Equipment Breakdown Environmental Umbrella Workers’ Compensation |
| Wind Buy Back | We now offer Wind Deductible Buy Back coverage on both commercial property and property in the Course of Construction. |
| Premium Financing | 10% Down, 10 Payments |
Challenging Times and Valuable Opportunities:How to Take Advantage of the Current Economic Situation!
Tuesday, December 7th, 2010 | Insurance, Landlord Insurance, Michigan, Mortgage, Real Estate, Vacant Home Insurance | 14 Comments
We are all aware of the terrible shape that our economy was in. While it spelt doom for some, for some it was a great opportunity to invest and expand their horizons, most particularly in the Real Estate Industry.
In Real Estate, still as of now the prices of new properties are low compared to what it was worth some years back. Many markets having shown an improvement of late, so now would be a good time to get in Real Estate before the markets start picking up. In fact, this is a good time to secure your future with real estate.
Two words: Foreclosed properties
Even now there are a lot of foreclosed properties for sale and buying the right property for rental purposes at this time will be beneficial because in addition to bargain prices, you will have plenty of houses to choose from. The higher number of unsold houses and low mortgage values will mean good bargain prices. Furthermore, the strict appraisal process for acquiring a loan that is now in place has helped keep prices low, thus investing into Real Estate is a very good choice at the current economic situation.
Try out in new markets
If you want to truly take advantage of the current situation, explore the non conventional market like in smaller cities where the markets have not started to or are in the process of picking up.
This is because the entry cost i.e. the initial capital required, is low compared to properties in larger cities. This is a good time for you to hone your investing skills.
Look at alternatives
If you don’t think you can have the stamina to become a landlord and don’t want to be bothered tenant troubles, than you can invest in real estate investment trusts, REITs, or buying shares in home building and associated businesses. With REITs, income is acquired through rents and thus the value of REIT stocks increase with increase in rent over time. Furthermore, REITs give you access to large scale real estate projects which are normally not in the reach.
How many homes are vacant in Detroit?
Tuesday, July 27th, 2010 | Landlord Insurance, Vacant Home Insurance | 23 Comments
There are a lot of investors looking at Detroit as a great place to buy cheap real estate. The thinking is if you can purchase a home with renovations included for $35,000, you can quickly turn a profit. Most homes in Detroit are brick, beautiful, 2 stories, and usually over 2,000 sqft. As a section 8 property the going rental rate is between $1000-$1400 a month. That is roughly $12,000 a year. In three short years the property would be paid and any future rental income would be 100% profit with the property having a resale value of about 50,000 if rented with a good tenant. Sounds great.
There’s only a couple of problems we even want to address here.
The first is insurance and taxes. With insurance rates ranging from $800-$3,500 a year and property and city taxes costing another $3,600 a year. There is a potential $7,000 a year in additional overhead. That’s not to mention theft, vandalism, arson, and tenants having to be evicted for various reasons.
The second is vacancy. According to Wikipedia, “The 2009 residential lot vacancy in Detroit was 27.8%, up from 10.3% in 2000, with the population continuing to shrink and foreclosures that exacerbate the problem.” So you have to ask yourself, “Who is going to move into my property? Is there anyone out there looking for a place to live?” It’s the classic supply and demand conundrum. Too much supply, too little demand.
Because of the economy, the shrinking and closings of the Big 3 auto and its suppliers, and enormous amounts of vacancies, the city of Detroit struggles to provide services and educational systems that can compete with many suburbs and other metropolises. Vacancies reduce taxable income and increase crime rates which puts an enourmous strain on public services to provide adequate resources. This only leads to more crime and reduced resources available to the communites they serve.
For Detroit to become a competitive city again this blogger believes they have to shrink the city back to its core and build from the middle out. Reduce inventories by eliminating vacant homes on the outlying areas and build from the center. Make it desirable and condensed. Not sure how that plays in politics but it does work for most other major corporations. When income is down, downsize.
As a side not, the deflating real estate values in the city of Detroit have spilled out to the suburbs which has created great investment oppurtunities. Some of the reasons for the rate of vacancy in the city is that more people can afford to move to the suburbs due to the deflated home values and rental rates.
Would you trust your family practice doctor to perform heart surgery?
Tuesday, June 22nd, 2010 | Landlord Insurance | 20 Comments
Landlord insurance is a complicated insurance contract. Homeowners are usually written on a HO policy form which is a broad form policy. A broad form policy is a “if it’s not excluded, it’s included” policy. That means a loss will be paid unless it is excluded in the contract. Landlord policies are dwelling policies and are usually written on a DP policy form which is different from a HO policy. DP policies are either basic or special. Basic and special have limited coverages. They are a “if it’s not included, it’s excluded” policy. That means the claim has to happen in a way that the policy lists as an included coverage. As you can see, that leaves a lot of open gaps that a homeowner policy doesn’t have.
A DP1 is a basic fire policy and does not cover wind, hail, vandalism, malicious mischief, burst pipes, or theft unless it is added to the policy as an endorsement. A DP3 does usually cover wind, hail, vandalism, malicious mischief, and burst pipes unless it is excluded. The reason dwelling policies are more expensive and have less coverage is because of the unknown factor of the tenant.
An insurance company when writing a landlord policy not only has to take on the risk of the homeowner and the property but they are also insuring the tenant in a way. The tenant could cause a fire, flood, vandalism and the insurance would have to pay a major claim due to a property being rented to an unreasonable tenant. Just like landlords usually don’t see a bad tenant coming in the door when they rent the property and the insurance company has even less knowledge of the person living in the home.
Our point is if an agent is very good at writing homeowners and auto insurance policies may not have the product diversity or product knowledge to give you the coverage you want and need. Some investors are more concerned with cash flow and have a lot of liquidity and are only looking at coverage for major catastrophic claims and they want to handle the smaller repairs on their own. They could buy a stripped down policy for minimal cost and maximize cash flow. Another property owner may be an accidental landlord because they had to move and couldn’t sell the home so they decided to rent it out. That person may need a more comprehensive policy because of lack of experience as a landlord and limited liquidity. The insurance policy will cost more but it provides a greater breadth of coverage to protect the landlord from a potential loss even if it is small.
Sometimes it is better to let the family practice doctor handle the sniffles and the heart surgeon to do the bypass. Sometimes its better to go to a clinic that has different departments that way your records and care is more closely coordinated. Just some food for thought (with a lot of fiber, of course).
Landlord Insurance Policy Discounts
Tuesday, June 22nd, 2010 | Landlord Insurance | 65 Comments
If you are looking for a landlord insurance policy or are thinking about trying another agent to insure your investment home, here is a list of possible discounts you may want to make sure you are getting.
Claims Free Discount- If you are without a claim for at least 5 years, some companies will give you a claims free discount. The downside is that sometimes we talk with clients who aren’t even aware they have a claim on their current policy. I know it sounds crazy but it happens more than you think. I have a great example of someone I spoke with today as a matter of fact. I told them the underwriting report showed a claim for $0. Yes a zero dollar claim. The client told me he had called in a claim because of a broken window and found out it was less than the deductible which was $500 so the customer paid it out of pocket. Unfortunately it is still considered a claim. Just because the insurance company didn’t have to pay for the window doesn’t mean that it’s not a claim. They did pay to send a claims adjuster so maybe that is how they justify reporting the claim. It shows as a claim for 5 years and will effect the rate with any new company he may want to have bid on his insurance. I always tell my clients to get an estimate before filing a potentially small claim because it could cost you big premiums long run.
Multi Policy Discount- Some companies will provide discounts if you write more than one policy with them. It may be as simple as multiple investment properties or as comprehensive as your personal home, auto, umbrella, business auto, and business insurance. It could save you a lot of money and could be more convenient since you will have less agents or insurance agencies to deal with should you have a problem or question. Insurance companies reward customers for their loyalty and trust. Plus they have more premium with a single person or business. They make more money and you save more money. A win-win.
Good Credit or Financial Responsibility Score- Many companies have come to the conclusion that a person who has a good credit score poses a more secure risk. Remember insurance companies work in large numbers. The idea is if you are able to gain a good credit score, you are financially able to maintain your property properly and there is less risk of insuring someone who may be in a desperate financial situation and who may also make a bad decision that may cost the insurance company hundreds of thousands of dollars. That is not to say people with bad credit are bad risks. Many good people have bad credit right now due to the economy and the availability of jobs. The point is insurance companies use many different variables and formulas to evaluate risk and some use credit scoring as part of their pricing model. Not all , but some do.
Year of Home- Some companies will give a discount for properties that are five years old or less. New homes have a much lower rate of claims. Homes older than 1930 may get a surcharge if the policy can even be written at all. Some companies will not insure an older home no matter what the other factors are. Older homes generally need more maintenance. Poor maintenance can result in a major claim.
Safety- Burglar alarm, bars on windows or doors, dead bolts, monitored fire alarm, smoke detectors, carbon monoxide detectors, and a fire extinguisher are a few safety items in or on your home that can reduce the risk of claim which results in a lower premium.
Tenant Screening Discount- This is the trickiest risk factor when it comes to a landlord insurance policy. Even though the owner is the one responsible for the home and its maintenance, it is the tenant who is the ultimate risk of claim in the home. Most landlord insurance policies do not have information on the tenant so they have to assume the tenant is a potential risk. That is why many landlord insurance policies are more than a homeowners insurance policy even though their is less coverage on a landlord’s insurance policy. On a homeowners insurance policy the insurance company knows who they are insuring, on a landlords insurance policy they only know part of the story. However, some companies will give discounts if the landlord checks the tenants credit, criminal background, eviction search, or requires the tenant to purchase their own renters insurance policy. Think of yourself as helping the underwriting department assess a potential risk and the insurance company gives you a discount for doing that.
Membership and Maintanence Discount- Being a member of a landlord association can be a discount. It shows pride in ownership and a certain level of sophistication. A landlord who owns properties as a business can be more aware of potential risks and may have a larger reserve to maintain and possibly handle small claims without involving the insurance company. Less claims means lower rates for the insured and the insurance company. Another discount is having a property manager managing the property. Property managers are hopefully professionals who are responsible for maintaining the property, screening tenants, and making sure the landlord has a well maintained property and tenant. A landlord who is a member of an association and uses a property manager could receive both discounts. AARP, Credit Unions and other organizations can also qualify you for discounts.
This is not an all inclusive list and many companies have their own opinions of what is worth a discount. Don’t be shy and ask, it could save you money. We represent many different companies and each one has their own appetite when it comes to investment properties. We write homes built in the 1800′s and homes with more than 3 claims and brand new homes in great neighborhoods. Give us a try.
What is Flood Insurance?
Saturday, June 19th, 2010 | Flood Insurance | 9 Comments
The (NFIP) National Flood Insurance Program was created by Congress in 1968. The program is for property owners to have protection from the damages caused by flooding. This insurance was designed because of the catastrophic nature of floods and the insurance companies inability to underwrite the risk of flood and be viable enough to pay the enormous claims.
The NFIP is meant to collect enough insurance premiums form the insureds to be self funded and pay all claims from premiums collected. Unfortunately due to the numerous catastrophic claims it has made the program under funded and it has cost taxpayers about $200 million annually to cover the losses. Congress originally intended that operating expenses and flood insurance claims be paid for through the premiums collected for flood insurance policies. NFIP borrows from the U.S. Treasury when losses are heavy, and these loans are paid back with interest. This is why the flood budget is subject to Congressional approval and is only being given 30 day extensions at this time until someone comes up with a better proposal for the future of NFIP.
Floods are not covered by homeowners insurance policies. It is a specifically excluded coverage. Wind, hail, and sewer and drain back up coverage are often confused with flood insurance. If rain comes in the home as the result of wind or hail damage, the homeowners insurance policy may cover the claim if it covers wind and hail claims. If the water is the result of a sump pump failure or too much water for the sewer and drain to handle, the water backup may be covered if the coverage is purchased by the homeowner and is on the homeowners insurance policy.
So what does Flood insurance cover. According to www.Fema.gov, here is a list of what kind of flood would qualify for coverage:
CAUSES OF FLOODING
Every part of the country is at risk for flooding from several causes. Some causes are seasonal, but other causes can happen at any time and are always a possibility.
Coastal Floods/Storm Surge: Winds generated from intense storms can cause widespread tidal flooding and severe beach erosion along coastal areas. Storm surges are large waves pushed toward the coast by strong winds associated with the storm. When combined with the tide, storm surges can cause water levels to rise up to 15 feet or more, deluging coastal communities. Hurricane-force winds can bring these large waves crashing into coastal communities in the summer months and nor’easters can
bring these waves to the Northeast in the winter.
Winter also brings strong storms to the Great Lakes. Winds can push water levels up at one end of the lake, causing a storm surge and decreased water levels at the other end of the lake. As the winds subside, a pendulum effect begins until the water levels have returned to normal. These oscillations or seiches can cause coastal flooding on both lakefronts.
Inland Flooding: Inland areas are also at risk for flooding from hurricanes. Slow-moving and stalled systems can
dump large amounts of rain, causing devastating inland floods days after a storm makes landfall and hundreds of
miles away from the initial strike zone. For example, in 2004, inland flooding from Hurricane Ivan caused more
than $115 million in paid flood losses in Pennsylvania.
Riverine Flooding: Riverine flooding generally occurs as a result of precipitation or snowmelt. Rivers and streams
become inundated by water causing them to spill over their banks.
Flood insurance is offered by insurance agents. An agent who can write flood insurance in their own state can write flood insurance in every state since it is a federal program. We write flood insurance in all 50 states and can help you if you need coverage. While flood is suspended due to congress failing to pass a new budget or extension for flood no one can write flood insurance through the NFIP. There are a few insurance companies that write flood insurance for areas not covered by FEMA whether it is a nonparticipating community or FEMA is not allowing new policies to be written through the program.
Interesting article presented to us about lead paint.
Thursday, June 10th, 2010 | Landlord Insurance | 10 Comments
New Lead Safe Practices Rule
Effective April 22, 2010, federal law requires that contractors performing renovation, repair and painting projects that disturb more than six square feet of paint in homes, child care facilities, and schools built before 1978 must be certified and trained to follow specific work practices to prevent lead contamination. Lead safe practices include minimizing dust, containing the work area, and conducting a thorough cleanup to reduce the potential exposure associated with disturbing lead-based paint.
The new law is expected to limit the risks of lead poisoning that might result from renovations made to older buildings. Renovation is broadly defined as “any activity that disturbs painted surfaces.” It includes most repair, remodeling, and maintenance activities, including window replacement, weatherization, and demolition. Generally, minor repair and maintenance activities (less than 6 square feet per interior room or 20 square feet per exterior project) are exempt from the work practices requirements. However, this exemption does not apply to jobs involving window replacement or demolition, or that involve the use of any prohibited practices.
The rule covers any individual or firm that is paid to perform work that disturbs known or presumed lead-based paint in housing and child-occupied facilities built before 1978. This includes but is not limited to general contractors; specialty trade contractors including painters, plumbers, carpenters, and electricians; home renovation companies; window replacement contractors; maintenance workers; and to residential rental property owners and managers who perform repairs and renovations themselves.
The rule applies only to renovations performed for compensation. Accordingly, if a homeowner performs renovation, repair or painting work on his own home, the rules do not apply. However lead safe work practices should still be followed to protect home occupants and the value of the property.
There is no question that the new rule applies to renovation activities performed by landlords or employees of landlords. Landlords receive rental payments and maintenance personnel in rental property or child-occupied facilities receive wages or salaries derived from rent payments. The receipt of rent payments or salaries derived from rent payments is considered compensation under the RRP rule. Therefore, renovation and repair activities performed by landlords or employees of landlords are covered by the rule.
Those businesses and individuals affected by the rule are required to:
Apply to EPA to be approved as a Certified Renovation Firm and receive the necessary training and certification from an EPA-accredited training provider for Lead Safe Work Practices.
Assign a Certified Renovator to be present at each project and ensure that lead safe work practices are used throughout the project.
Provide consumers or tenants with the EPA pamphlet “Renovate Right” prior to the start of each project and maintain records documenting that the required information has been provided at each project subject to the rule.
Those seeking to become certified and trained can find more information on the process and a list of accredited trainers at: http://www.epa.gov/lead/pubs/renovation.htm#contractors.
Hundreds of thousands of businesses including contractors, painters, and even neighborhood handymen are affected by the new rules on lead-based paint safety. Failure to comply can be costly, with fines up to $37,500 per violation per day. In addition those who fail to meet the new certification and training standards could potentially be subject to lawsuits from individuals whose health was endangered by the violations.
To date, EPA has certified 204 training providers who have conducted more than 6,900 courses, training an estimated 160,000 people in the construction and remodeling industries to use lead-safe work practices. EPA estimates that more than 200,000 contractors will apply for the new certification.
In addition to the rule becoming effective, the EPA has issued these additional actions:
A notice of proposed rulemaking to require dust-wipe testing after most renovations and provide the results of the testing to the owners and occupants of the building. For some of these renovations, the proposal would require that lead dust levels after the renovation be below the regulatory hazard standards. EPA will take comment on the proposal for 60 days. The agency expects to finalize the rule by July 2011.
An advance notice of proposed rulemaking to announce EPA’s intention to apply lead-safe work practices to renovations on public and commercial buildings. The advance notice also announces EPA’s investigation into lead-based paint hazards that may be created by renovations on the interior of these public and commercial buildings. If EPA determines that lead-based paint hazards are created by interior renovations, EPA will propose regulations to address the hazards.
Additional Information
For more information regarding the new rules visit www.epa.gov/lead or call the National Lead Information Center at 1-800-424-LEAD (1-800-424-5323).
Article presented by rhol.com, Rental Housing On line.
Why is it so hard to insure a vacant house?
Monday, March 1st, 2010 | Vacant Home Insurance | 18 Comments
Many homes are vacant today for various reasons. Many homes have been foreclosed, are up for sale, or waiting for a tenant. A vacant home poses a big risk for the insurance company when the properties are viewed in a grand scale. One home claim for $50,000 requires a lot of people to pay premiums for the company to pay. The rate of claim on a vacant home is smaller but the overall claims are larger due. If no one knows there is a problem with the house, the damage accumulates.
When a home is vacant a very small problem can become a very large problem. Take for example a leaky pipe. We insured an apartment building and when the tenant moved out they did not turn off the plumbing properly on the second floor when they removed their appliances. The dripping was so slow it was almost unnoticeable, but was able to create enough damage to bring the ceiling down on to the first floor and destroyed some of the kitchen cabinets. If no one is actively working or living in a property on a daily basis, a home claim can really get out of hand.
Another major problem with a vacant home is vandalism or theft. A property left alone is prone to attract oppurtunists expecially in a more densely populated area like Detroit or Cincinatti. We have homes in Detroit where other property owners steal cabinets, plumbing, and other building materials for their own rental property. Also because copper is such a hot comodity many homes were being stripped for salvage. We also had a home insured that was used for a dog fighting arena because someone knew the property had been vacated. The property was severally damaged and the dogs were left behind.
Many companies are not equipped nor have the underwriters to properly rate and write insurance on vacant properties. There are companies that specialize in vacant home insurance and are offered by a few agents. The hard part for you is finding an agent who knows the product and coverages and also writes for a company that will insure a vacant home.
We have chosen to specialize in insuring homes, landlords, and investment properties. We insure vacant properties even if they are being rehabbed.
For advise or a quote please visit our website at http://www.mylandlordinsurance.com or call us at 888-438-4544 and ask for Don
The Landlord Insurance Specialists.
Recent Posts
Categories
Blogroll
Links to Other Blogs and Websites
Useful Website
Recent Comments
- Mikel on The Fundamentals Of Car Rental…
- Paul White on Commercial Real Estate Investing- Overview
- Stainless Steel Cappuccino / Milk Frother on Landlord Insurance Policy Discounts
- Emerilware by T-Fal Emerilware 3-PoundBread & Baguette Maker Review on Understanding Your Home #Insur…
- diablo III news on How many homes are vacant in Detroit?
