October 4, 2013
Disaster can strike without warning, lightening, storms, hurricanes, fires; these are all present and very real dangers to property. It’s actually a fact that most homes become distressed due to insufficient insurance coverage in the face of unforeseen natural disasters or circumstances.
Getting the right coverage for your real estate project is not at all difficult. If you put in the time to find the right company that can provide the coverage, or you can find an insurance agent you will be able to secure your investment and make sure that you are prepared in case of any unforeseen circumstances.
Review the Agreements Thoroughly
Once you start tracking down insurance companies, make sure you compare and review projects accordingly, there’s always a part in the agreement regarding Maximum coverage limits that’s the part that you need to look out for, while all clauses of an agreement are important and need your strict review, you will need to pay special focus in your property liability coverage.
What is Dwelling Coverage
The Dwelling coverage section of the agreement provides cover from perils ( fire , windstorm, flood etc ) you need to find the amount listed and divide it by the covered area of the home, consult an agent or contactor and find out if the dwelling coverage is high enough. Usually $200 to $400 is a reasonable range, considering quality of construction materials.
Protection from Liability
If someone ahs any kind of accident on your property, you can be sued for that, liability protection can cover you in such an event. Generally liability coverage offer around 100K to 200K of protection that’s usually enough but if you want to take the extra precaution umbrella coverage can ramp up your coverage up to a million for an additional $250 to $450 annual based on your provider.
A little prevention in this matter can save you from a lot of heartache, most real estate investors usually take care in getting insurance for their project right from the very start, some are careless or don’t want to spend the money for insurance.
In this case it’s always the smarter option to save yourself by getting a decent coverage plan that covers you from both unfortunate circumstances and liability.
Possible Hurdles
There are possible hurdles in getting an insurance carrier to invest in a property that is vacant, carriers usually don’t allow an adjustment on properties that are Vacant because of the potential insurance risk of vandalism and property defacement, there are ways around that though you could negotiate your insurance through an insurance broker, or possibly go for a short term insurance plan that is minimal risk for both the insurance company as well as yourself.
Be warned though that short period insurance are usually for a 6 to 9 month duration and the premiums are on the higher side, but ultimately it’s better than having no cover on your property at all.