How can you pick the best insurance company to offer coverage for your investment properties?
Like all people who are shopping for insurance, you are going to shop around and compare both costs and coverage. But because you’re a real estate investor, you have some special needs to consider. Be sure to take these steps too:
Discuss your overall investment strategy with the agent. Investors have special situations that need to be discussed, like these . . .
- Will you need to insure one house for only six months before you sell it?
- Will you be adding additional properties to your portfolio of investments soon, and needing to insure them for short periods of time too?
- Will you be investing in retail space and office buildings? Remember, such properties can require special liability coverage.
Ask about the company’s experience. Ask if the company has covered other real estate investors, ask who they were, and ask what kind of properties were involved. If possible, you want a company and an agent with the knowledge to anticipate problems and make sure that you are protected.
Investigate the company. All the coverage in the world will not be enough if your insurance company is in financial trouble and takes months to pay claims. So be sure to investigate companies by using these resources:
- A. M. Best – http://www.ambest.com/home/default.aspx
- Insure.com – http://www.insure.com
- Moody’s – https://www.moodys.com/
Ask to see the forms that you would have to fill out to file a claim. Can you understand them? Do they ask for documentation that would be too difficult to provide? Also ask the agent to explain how long it would take to get reimbursed for claims that you file. If you had to pay out $10,000 for a new roof after a hurricane and then wait six months to be reimbursed, for example, what kind of damage would that cause in other areas of your real estate activity?
The bottom line is, you are looking for a company that can flexibly meet your coverage needs. As a real estate investor, you need different coverage than the average homeowner does.
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