NUTS & BOLTS
PROPERTY INSURANCE
Always require in your lease that tenants have renter’s insur- ance – and enforce that requirement. Be sure you are listed as an “additional interest” in the event that the insurance policy lapses. THREAT #2 DOGS & OTHER ANIMALS Do you allow your tenants to own a Fido or Fifi? Some say that allowing pets can help the marketability of a unit, while others feel that the potential for stained carpets and smells that come along with furry creatures end up costing in the upkeep of their invest- ment. You will want to familiarize yourself with this exclusion from your insurer. Some companies limit coverage based on dog breed, and most policies will have a reptile exclusion. Consider carefully whether you will allow pets other than service animals in your rent- als. Dog bites are one of the most common injury issues we see. THREAT #3 CONTRACTORS' INJURIES & WORKMANSHIP Many investors assume that if a contractor is injured on their property, their policy will cover the medical bills for that injury. The truth is, many policies exclude injuries to contrac- tors along with “Products and Completed Operations” because those items are covered under different policies contractors se- cure for themselves. A contractor’s General Liability policy will cover for any flaws in workmanship, while Workman’s Comp policies help get injured workers back on the job. Two other pieces of advice from us: 1 To avoid increased liability risk, don’t allow friends, rela- tives or their kids to help on projects. Your coverage will not respond if they are injured. THREAT #4 THEFT & VANDALISM (THEFT/VMM) Policies are typically written on one of three standard forms: Ba- sic Form, Broad Form, or Special Form. These forms dictate what types of losses are insured under the policy. Vandalism losses are often covered on all three forms, but Theft is typically only covered under the Special Form. Some investors may think it’s not possible to protect their property from theft or vandalism, but you can take steps to keep your property from being targeted: 1 Make your property look as lived-in as possible: Don’t let mail build up! 2 Locks & door reinforcement: Lock the doors and windows, reinforce exterior doors and control copies of keys to the property. 2 Make sure any contractor you hire is properly licensed and insured, including any sub-contractors.
3 Neighbors: Use their extra eyes to help you monitor your property. They want a safe neighborhood more than you – they live there! 4 Regular visits: Abandoned properties are not covered under any insurance policy and those visited infrequently are more vulnerable to a theft. 5 Yard maintenance: Don’t let the yard go between tenants. This is a big signal to criminals that your property isn’t well looked after. Removing overgrowth eliminates a place for them to hide.
Clearing Up Insurance Exclusion Confusion, Part 3 4 RISKS INVOLVING PEOPLE AT YOUR PROPERTY.
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BreAnn Stephenson is the assistant vice president of Affinity Loss Prevention Services. Helping you stop “bad stuff” from happening at your property is her mission. She may be reached at www. affinitylps.com, where you can also find discount codes for StoveTop FireStop’s cooktop line and other protective products.
by BreAnn Stephenson
A single burglary on a vacant or renovation property can cost over $8,000. That’s over 4 times the national average per break-in! Real estate investors can experience higher losses due to stolen appliances, HVAC Equipment, wiring, plumbing and more. 56% OF THIEVES BREAK-IN THROUGH A DOOR. WE'RE IN YOUR CORNER.
Notice some unusual punctuation or capitalization in this insurance article? These anomalies are not typos, but deliberate. When covering insurance- related topics, we capitalize intentionally to indicate types of coverage, exclusions, or policy formats. For example, Water Damage, when capitalized, refers to the coverage in your policy. Without the capital letters, you are simply discussing damage done by water, which may or may not be covered. and don’t ignore your gut or any red flags on their application or in their history. Is there any coverage for wear-and-tear? “Wear-and-Tear” can look severe in some cases, perhaps enough for a landlord to feel that it constitutes “Vandalism,” but the key is that this damage is caused by the daily stress- es of living over time. Broken blinds, marks on walls, and worn/stained carpet are a few of a list of items that should be addressed by the security deposit or a civil suit if necessary. Sometimes a fresh coat of paint is just the cost of doing busi- ness as a landlord. Items that insurance pays for, on the other hand, are sudden, accidental, and unforeseen. They are not maintenance items.
This is the third part of a three-part article series titled “Is It Covered?” by Affinity Loss Prevention Services (ALPS) assistant vice president, BreAnn Stephenson.
ou may think that you’ve got your insurance basics down if you recognize terms like “replacement cost,” “actual cash value,” “co-insurance,” and “depreciation.” If you know your deductible and have a general idea of your cover- ages, that’s a good start, but have you ever sat down to read further than the introduction to the novel, so to speak? It’s definitely not a short or a light read, but the remainder of your policy’s contents could come back to haunt you if you aren’t familiar with the specifics of what is and isn’t covered. Insurance is complex, and it’s important to understand how each aspect of your policy applies to your property. Today, we’ll cover four often-overlooked threats to your real estate invest- ments involving people on your property. THREAT #1 TENANT DAMAGE Many investors assume that any kind of damage done by a tenant will be covered under their policy. While accidental cooking fires or a toilet overflow may be covered, intentional damage is usually not. Therefore, tenant screening is important not only so you can rent to a timely-paying tenant, but also so you don’t have to perform an eviction on someone likely to re- taliate by damaging your property on the way out. Be thorough
Prevent costly break-ins. Reinforce your doors. Layer your Security with products from:
Visit AffinityLPS.com for more tips and discounts on products to help you protect your assets.
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