Guides & Processes
Markets
<aside> 💡 Landlord insurance is different from homeowner's insurance. Make sure you are properly covered; your lender will likely require it.
</aside>
Consider getting liability insurance, which is cheaper and easier to set up than an LLC.
Get coverage at replacement cost, not cash (or actual) value. Replacement cost gives you the money replace the item pre-loss condition. Cash value means they’ll depreciate your equipment. For example, this means the insurance company is not giving you the money for a brand new heater, but they’ll pay you a fraction based on the age of your broken one.
Double check that your deductible is high enough; commercial buildings can be worth $10m, so a 5% deductible means you'll need to front $500k.
Finally, consider going through an insurance broker; if you’re bad with too many moving parts like me, they'll make sure you get the lowest rates each year and that you don't forget to cancel it.
If you are in a flood plane, then you will be required to have flood insurance.
But if you are in a flood plane AND have a grandfathered rate, it could quadruple your premiums once it gets flooded even once.
Homes in flood area [sell for a bigger discount](http://www.freddiemac.com/research/insight/20200910_unravelling_perceptions_of_flood_risk.page?) on average of 2.3%. That discount increases after flooding events to 5.5%, this includes nice coastal areas.
Landlords are strongly encouraged to obtain landlord insurance. This type of insurance covers legal costs and claims resulting from accidental damage, but does not provide protection against intentional damage, contractual liabilities, or criminal prosecution.
D&O - Negligent acts, omissions or misleading statements committed by directors and officers of a company
E&O - Errors and omissions coverage protects people that give advice, make educated recommendations, design solutions or represent the needs of others
EPLI - Covers employers from claims made by works who have sued the company for violating their legal rights as employees
Products/completed operations
Excess liability
Umbrella liability
Occurrence
Claims-made
Prior acts ("nose")
Prior acts coverage
Run-off ("tail") coverage
Stay ahead of the game by taking proactive steps to ensure your claims history is up to date. Document all loss control and risk management measures that have been implemented, including any training that has been completed. Obtain quotes from multiple companies to ensure you have the best coverage available.
If an insurer declines your coverage, keep shopping for a better option. Review your limits of insurance and make any necessary adjustments. Be prepared for potential premium increases. Lastly, verify that your agent and insurer have the proper licenses.
For flippers, if a residence is vacant for more than 30-60 days and you anticipate remodeling, disclose this to the insurance carrier. Otherwise, they may use this information to deny your claim.