Did You Change Lately?

Changes in home ownership and occupancy can affect insurance coverage. You must find the right policy for the property and its use— in effect, the round peg for the round hole.

 Here are the basic property insurance policies and what they cover, along with some changing circumstances we often discover that no longer work for these policies.


A homeowner’s policy will cover 1-4 family units and/or contents owned by an individual or a trust, and occupied by the owner, trustees or beneficiaries. It will cover both the property and the liability for stated perils. The home must be occupied and furnished within 60 days of the effective date— sometimes 30 days, if the insurance company’s guidelines require.
A business owner’s policy will cover property units owned by an individual, partnership, corporation or any combination of those. It will cover both the property and the liability for stated perils. The property must be occupied and furnished within 30 days of the effective date.
A dwelling fire policy is designed to cover the structure of a building owned by an individual or a trust which is occupied, but not by the owner. It will cover liability for the premises only.  The home must be occupied and furnished within 60 days of the effective date— sometimes 30 days if company’s guidelines require.

Obviously, the family with a primary home or a rental property occupied by a year-round tenant are the round pegs. But what happens when there are different circumstances than those mentioned above— in essence square pegs? Unusual circumstances seem to be growing more rapidly than the insurance industry can accommodate. Here are some common ones that I am seeing:
For health reasons, a person has to permanently move to a care-giving facility—leaving their home unoccupied.

The home is being foreclosed-on, and the owners have left the home.

For legal or tax purposes, the home ownership shifts to an LLC, LLP or corporation.

You purchase a new home, but want to do work on it before moving in, and it will take longer than 30 days.

You purchase a home with the intention to renovate and resell.

If you do not communicate these changes or intentions to your local insurance agent, Jason Shroot, it can jeopardizes your coverage for claims even though you continue to pay premiums. In some circumstances, homes will be covered until the existing policy period ends, as in the case of a deceased homeowner. In other cases, coverage may extend to your changing circumstances for 30 or 60 days before the insurance contract or specific coverage voids, as in the case of a vacant home. Or at claim time, you could find that you have no coverage since you’re no longer adhering to the insurance contract you signed.
A good example occurs when a primary home becomes a rental home. The remedy is to find a policy that fits the changed circumstances; coverage may be different and more expensive especially in the instance of vacant-home policies. An appropriate policy is a necessity.
These days, Jason Shroot is seeing that the Insurance companies are taking a very hard line with changed circumstances, most likely due to the huge increase in vacancies, foreclosures and arms-length liability transactions— all spurred by these difficult economic times.   Insurance Companies have even increased the scope and frequency of inspections to help manage the situation. In essence, insurance companies no longer allow square pegs in round holes.

Please Contact Jason Shroot at 714-988-3325 and let's please review your insurance policy situations.

Please also contact Jason Shroot at www.JasonSellsInsurance.com or jason@diversifiedinsurancequotes.com

Landlord Policies - Renting Out Your Home

The Coverages You Need When You Rent Out A Home You Own....

Oftentimes, landlords think they can keep their standard homeowners insurance policy while renting out their home instead of purchasing a landlord policy. However, when you rent out your home your homeowners insurance company will not typically cover claims made on a standard homeowners policy.

A Landlord Policy is Different From a Standard Home Insurance Policy!

A Landlord Policy is a policy specifically designed for someone who is renting out their home to tenants. It offers most of the same coverages as a standard homeowners policy with a few changes tailored to meet the special needs of a landlord. 

For example, a standard homeowners policy typically provides up to 70% of the dwelling coverage for contents coverage. However, the contents coverage under a landlord policy can be altered to provide the amount of coverage needed by a landlord. If you are renting out an unfurnished home, for example, you would not need a large amount of contents coverage as you might if you are renting the home furnished. So, if you are renting out an unfurnished property, you might want to purchase just enough contents coverage to protect any appliances you have in the home.

Also, typically under a Landlord Policy you would have Fair Rental Loss coverage which replaces Loss of Use coverage under a standard homeowners insurance policy. Fair Rental Loss coverage protects your rental income in the event your home is damaged or destoyed due to a covered loss and you cannot collect rent on the property while it is being repaired/rebuilt. Limits for this coverage are typically around 10% of the Dwelling Coverage-however this can vary from one policy and company to the next.
As a landlord, it is always a good idea to encourage your tenants to purchase rental insurance. Rental insurance offers liability coverage which would be a great asset in the event that someone presents you and/or your tenant with a lawsuit for damages that occurred on your property while your tenant was residing there.

Also, since your Landlord Policy would not cover the renter’s possessions in the event they were stolen or damaged in a loss, they should have renter’s insurance to cover their belongings while they are living in your home.

For More Information Or A Free Quote Please Contact Jason Shroot at 714-988-3325 Jason@diversifiedinsurancequotes.com

http://www.diversifiedinsurancequotes.com/

PROPERLY insuring your Rental Property

So, you’re going to be a landlord! Since it’s nearly ALWAYS a good time to buy real estate, you’re making an excellent move. The long-term value of real estate from an investment standpoint is, in my humble opinion, the best leverage available.

Now that you’ve taken that step, it’s important to get the right kind of insurance to protect not only your investment from the ravages of fire, vandalism, smoke, and broken water pipes, but also protection from the greedy hands of your tenants should they sustain an injury on your property in the form of Liability Coverage.

There’s usually 4 primary areas of coverage you want to explore when looking into insurance for your property that you rent to others. (doesn’t matter if it’s a single family dwelling, duplex, multi-plex or a condo.

1. Building Coverage – Protection for the structure.
2. Personal Property Coverage – Protection for the contents of the unit that you own. This includes refrigerator and window treatments primarily. It would also include any other non-building type items that you own and are stored or used in the rented dwelling.
3. Loss of Rents Coverage – This pays your fair market rent value to you whenever your property is rendered uninhabitable from a covered loss.
4. Liability Coverage – This is that important coverage that protects you when tenants or their guests are injured or sustain some “other kind” of “loss” that they think is YOUR FAULT and they come after you with vengence and an attorney!

1. BUILDING COVERAGE

This coverage is identical to homeowners insurance in that it protects the building against physical loss from perils like fire, smoke, vandalism, water damage from broken appliances and pipes, falling trees, automobiles, etc. It’s usually written on an ALL RISK basis. Which is fancy insurance talk that simply means EVERYTHING except certain listed exclusions is covered. In other words, if something happens to the structure and it’s NOT listed in the exclusions… IT’S COVERED!

You’ll want to get enough coverage here to rebuild the structure at current construction costs. Ask your agent of a general contractor what current constructions costs would be for a place like yours. For a more complete discussion, read HOW MUCH HOMEOWNERS INSURANCE DO YOU REALLY NEED (the section on the building coverage walks you thru the same thinking you’ll need to determine coverage on your rented property.)

2.  PERSONAL PROPERTY COVERAGE

This portion provides coverage for items that you likely brought to the property. (Exception here might be a refrigerator or window treatments) Rule of thumb is that if it’s permanently part of the structure it’s a building item, if not, it’s likely a personal property item. Most window treatment items (curtains, blinds, curtain rods) will be personal property (check with your agent to be sure) Refrigerator is personal property. An installed dishwasher is likely a building item.

Usually you don’t need too much coverage here — $2000 to $5000 is usually enough, but add your stuff up to be sure.

3.  LOSS OF RENTS COVERAGE

This is important to provide a consistent flow of income should you sustain damage to the property that renders it uninhabitable for a period of time. Policies can pay for up to 12 or 24 mos or some offer an indefinite period of time. Usually it’s just for a short time like a few days or a week or two.

4.  LIABILITY COVERAGE

This could be one of the most important decisions you make regarding your rental property insurance. My advice is to think of $1 Milliion as a minimum. The difference between $300,000 and $1 million is likely less than $100 per year ($8.00 per MONTH) Beleive me, a WISE investment in the protection of EVERYTHING you own. Liability losses can be wide ranging and EXTREMELY varied in nature.

Here’s a quick story about one…

Just this year a policyholder called me and told me that they were being sued because their tenant’s girlfriend accidentally let the tenant’s dog out of the back yard. The dog made a beeline across the street and kicked the stuffing out of the neighbor’s dog. The landlord (NOT the tenant or the girlfriend) was being sued by the neighbor for veterinarian bills that exceeded $3000 and for mental anguish, stress, and… well, you know the drill. Fortunately my policyholder had not only their Rental Dwelling Insurance in place but also a $1 Million Liability Umbrella standing between this crazy neighbor and everything they owned. Without that, this could have been their problem…
They could have been paying off this “little problem” for years. They could have risked everything they own in addition to their FUTURE EARNINGS by not having the foresight to get adequate Rental Dwelling Insurance and a LIABILITY UMBRELLA policy.

You can insure your rental property, your personal property and your liability exposure in one simple policy. Be sure to take your time and spend a few minutes in the chaos of the transaction to talk with your insurance professional about these important coverages.

You can always Jason Shroot with Diversified Insurance Quotes with Questions & Quotes at 714-988-3325 or jason@diversifiedinsurancequotes.com