R eal estate investing moves fast. Especially in today’s market with rising interest rates, and supply chain issues, you don’t have time to waste. If you find a deal, you need to close—yesterday. Understanding the ins and outs of investment real estate insurance is one way you can avoid delays and costly mistakes. Yes, insurance is boring—at least until something goes wrong. When that happens, your insurance broker can become your best friend or worst enemy, depending on decisions you made at the start of your project. HOW TO CHOOSE YOUR INSURANCE BROKER Before buying properties and lining up renters, you want to find an insurance broker to partner with for your investment insurance needs. An insurance broker can help you because a broker has broader access to underwriters, giving you more options and choices. With so many insurance brokers listed on the internet, how do you choose the right one for you? Be prepared to ask a few dir- ect questions. First, does the broker have a sound understanding of the habitational risk marketplace? In other words, do they write policies for real estate investors for all types of properties? Are they familiar with fix and flips, rentals, and investment property liability policies? If they approach insurance from the standard home ownership perspective, they will likely present you with policy options that do not work for the nuances of real estate investing. Every investor is different, and so are their needs. From the way you set up your business to the types of properties you invest
in, your insurance broker should understand your unique needs and be able to build policies to suit them. Second, can the broker write policies for all types of properties,
REDUCING YOUR RISK IN THE LANDLORD-TENANT RELATIONSHIP Given the many pitfalls of real estate investing, there are a few simple steps—in addition to obtaining the proper insurance coverage—you can take to better protect yourself, your company, and your properties. First, run a background check every time, for every tenant. Identity theft is rampant. Make sure you are renting to someone who is who they say they are. The cost of a background check is minimal, and running a check can help give you peace of mind. Next, require a certificate of rent - ers insurance for every tenant, every time. Just because someone says they have coverage does not mean they do. By requiring a certificate of insurance, particularly for multifam- ily buildings, you assure your tenants you want responsible people residing in the buildings you rent. Additionally, we strongly encourage you to have signed leases for all tenants, even if they are a friend or relative. Signed leases are legal documents that outline the responsibilities of both parties in
wherever they are located? Sometimes referred to as a
“one‑stop shop,” this type of broker can write policies across the country and for very different types of units or locations. It is important for you to realize that writing policies in hurricane zones is different from writing in snowbelts. A great broker can do both. Finally, many investors are inclined to choose the minimum coverage, yet somehow believe they are getting maximum protec- tion for their asset. Remember, you always get what you pay for. Taking the time to talk to a broker about your specific needs and your coverage expectations may mean you spend a little more upfront, but you get the very best coverage for your situation. A great broker will also uncover bundling options and packages that can expand your coverage and maximize protec- tion—without breaking the bank.
Many investors are inclined to choose the minimum coverage, yet somehow believe they are getting maximum protection for their asset. Remember, you always get what you pay for.
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