Ahhh property insurance! Who here has read their entire insurance policy? Before everyone raises their hand, let’s be real. Reading and talking about insurance sounds super boring. However, as a licensed agent -turned - financial coach, I’ve seen the devastating financial impact of NOT having the right coverage, especially when folks didn’t even know what to ask. So, protect yourself, your family, and your real estate by starting with asking the right questions.
First, you’ll want to know that insurance agents immediately have a conflict of interest (by admission of the continuing education ethics classes) because they are selling you an Insurance Product and giving you advice with a monetary reward in mind. Even though there are honest agents out there, know that even the best ones have a financial self-interest in working with you, very low level of training on their products, and most are terribly over-worked. Hence the reasons I no longer represent any one company but advocate for my private clients.
Disclaimer: Insurance varies from state to state in crazy, enormous details. I’m a licensed agent and licensed for claims adjusting on the East Coast. You’ll want to check out the questions below in terms of your state and local insurance laws.
When you call this week to review your policy with your agent, you’ll want to be sure to sweetly communicate that you have some questions and ask if they can set aside an hour. Agents are always over-worked and you’ll want to set the tone as positive and cooperative. You need answers! You need to make strategic decisions to protect your hard earned real estate! Your agent needs to be on your winning team of professionals that are working for you to protect your business.
Feel free to copy and print this list of questions for your meeting.
Question #1: “What Companies do you represent? Are they AM Best rated?” *This is the grading scale for insurance companies financial stability. Not a complete safe-guard but definitely helps. Your policy is ONLY as good as the company backing it up.
Question #2: “Does my policy cover the structure of my property at either Actual Cash Value or Replacement Cost?” If it’s Replacement Cost, is it FULL Replacement Cost or partial with Co-insurance? What is the Deductible and how does that work with ACV or Replacement Cost? *Make sure and land here for a while. This is a key component of your policy.
Question #3: “Does my policy have any limitations or exclusions that I should know about?” Ask your agent to pull up a digital or physical copy of your EXACT policy so you can look at the policy language together. Chances are your agent HAS NOT READ the policy for a long time, if ever. Be kind, but watch their response. You want an agent that actually reads what they sell.
Question #4: “How many policies do you work with that are like mine?” **This shows their level of daily expertise in the type of real estate that you own. If you’re the only one real estate investor in the agent’s whole book of business, you should be shopping for a new agent who works with your type of real estate on a regular basis. The insurance industry is quickly changing and is often NOT real estate investor friendly. You need a strong insurance agent who is keeping up on the changes that will impact you.
Question #5: “For the company that I have, how has their claims department been in handling claims for other clients? “ Stop here and let them tell stories. They will always have either good, neutral, or bad stories. You get to decide if that’s the kind of claims department you’d like to work with if something catastrophic happens.
Question #6: “I’d like to compare prices, but keep a high-level of coverage and service. What companies do you recommend?” Again realize, that they are always calculating commission. No judgment, they have families to feed. Look for an agent who can offer different companies (sometimes called an independent agent). Also, call other independent agents to get a quote. Please don’t work online! The artificial intelligence and automatic underwriting is not yet able to adequately evaluate your needs as a real estate investor, even if you only have a small portfolio. This is too important of a financial and strategic decision to purchase online.
Question #7: “What are my liability limits and what happens if I have a negligence claim?” Heaven forbid you have a trip-and-fall claim and get sued but you need to know how that works. Ask lots of questions until you are confident you’ve received that answers that will help you avoid this deathly serious kind of claim.
As you are building your real estate business, you are becoming the watch-dog of your asset and company. With this set of questions, you’ll begin to evaluate what you need and whom you want to work with in the important area of insurance. If you have any additional questions, you are welcome to call our office 740-255-3586 or email me at firstname.lastname@example.org.