Why Recent Events Should Have You Assessing Your Risk & Insurance B y now, you’ve likely seen the images and heard the stories
covered unless it is specifi- cally excluded. Please note that flood and earthquake are typical exclusions. • Loss Settlement. Replacement cost versus actual cash value – if you have replacement cost, there is no depreciation with- held when you settle your loss. • Do you have a coinsurance clause? It is important to under- stand how coinsurance works in a property insurance policy as you can face significant penalty for being underinsured. • The amount of coverage in place. Is the amount of coverage you have in place adequate to repair or rebuild your dwelling? • Loss of Rental Income. Many investors also suffer a loss of income in the event of a claim. Do you have sufficient loss of rental income coverage in place in the event you have a covered insurance loss? Most insur- ers will cover you for up to 12 months of lost rental income while your dwelling is being repaired or replaced. ings and/or invest in multiple markets, then it is important to understand what types of disaster events can impact your proper- ty(ies). Common occurrences are hurricanes, tornados, hailstorms, wildfire, mudslides and floods.
The Dallas/Ft. Worth area has experienced wind and hail events over the last several years. Many insurers have begun limiting or excluding coverage on roofs for hail losses based on the age of roof, and many real estate inves- tors have experienced first-hand the effects of having insurance coverage that doesn’t match their expectations. As evidenced from the destruction caused by Hurricane Harvey and other rain-based events, flooding can be widespread and extremely damaging. As we now know, most of the properties that have been affected by flood events in Houston were not covered by flood insur- ance. It is important to note that many houses that did experience flood damage were not in what is considered a Special Flood Haz- ard Area (SFHA), which is an area where a mortgage lender would require flood coverage. To achieve your real estate invest- ment goals and maximize yield, it is important to understand the risks you face, how those risks can be controlled or managed, and what your exposure is in the event that you have a loss that may be uncov- ered by insurance. The Nation’s leading insurer of residential real estate property, Real Protect, can review and analyze your insurance coverage and provide strategies to reduce your direct and indirect cost of risk and insurance. Please visit www.realprotect.com or call 1-800- 579-0652 for more information. •
from recent natural disasters such as hurricanes, floods and wildfires. Millions of people have been dis- placed temporarily or permanently due to these events, which have caused billions of dollars of prop- erty damage – much of it uncovered by insurance. As a real estate investor, you are not averse to taking risk. Howev- er, there are ways to mitigate and think about your risk and insurance that are important BEFORE the next big natural disaster occurs. 1. Understand your coverage. When putting your insurance in place, it is important to know what is – and isn’t – covered by your policy. There are many nuances in how your agent insures your property that can lead to expen- sive lessons at the time of a claim. Be sure to check: • Deductible. Can you afford the out-of-pocket expense if you have a covered claim? Does your deductible apply per property or per occurrence? In the event of a widespread loss event like a hurricane, can you afford one deductible per property? • What perils are covered? Special or “All Risk” is recommended. However, many policies cover you under a Broad or Basic
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2. Understand your geographic risk. If you own multiple dwell-
coverage form. These per- ils limit what types of losses are covered. Under a Special or “All Risk” form, you are
INVESTOR REVIEW :: 13
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