Are your properties adequately insured? How much coverage is enough coverage when it comes to liability insurance? Shawn Woedl of the National Real Estate Insurance Group (NREIG) sat down with Think Realty Magazine after his Baltimore breakout session to share these tips to help investors choose what type of liability insurance will get them the best and necessary coverage for their properties. Be it one investment or dozens.
Here are five tips to make sure you have the best possible liability policy for your investment properties.
1 | Consider Highest Per Occurrence & Aggregate
Entertain carrying the highest per occurrence and aggregate – the maximum amount of coverage your liability policy will pay out over a 12-month annual term, which resets to a new limit every year at renewal – limits available to investors with regards to your Premises Liability coverage. This should be no less than $1,000,000 per occurrence and $2,000,000 aggregate limits. Often times, the added cost to increasing your existing liability limits to the maximum available is minimal and well worth the expense. Settling for limits less than this, leaves you vulnerable to added expenses following a loss at one of your locations that goes through a lengthy litigation or involves a wrongful death.
2 | Canine Exclusions
Full or even partial (to exclude the top 8 or 9 vicious breeds) Canine Exclusions can leave you vulnerable if your tenant’s dog bites someone and you – as the owner of the property – is named in the lawsuit. These Canine Exclusions are typically present on Premises Liability coverage forms available to real estate investors. Insure your investment properties with a carrier who does not have any Canine Exclusion present on their coverage form.
3 | Check Your Pollution Coverage
Pollution coverage is another exclusion that most carriers bury into their exclusion pages of their policy that can harm an investor. Pollution coverage can extend to a tenant who is made ill, or worse, from carbon monoxide poisoning that emanates from a heating source inside your property. As you can probably imagine, these types of claims are less frequent than others, but also more severe when they do occur. Always better to be safe than sorry when insuring investment properties.
4 | Don’t Settle a Claim on Your Own
Never attempt to settle a liability claim on your own. When entering into your contract with your liability insurance carrier, you inherit the obligation to make them aware of even a potential issue immediately upon learning of it. Failure to do so, or attempting to settle on your own, gives your liability carrier a reason to decline the claim all together. Turning in a potential claim that never surfaces and nothing is paid out, does not diminish your ability to obtain liability coverage at renewal. It should not increase your cost for the coverage, either.
5 | Umbrella Policies
Umbrella Policies provide the unique ability to garner additional limits of liability coverage, above and beyond the limits your Premises Liability provides. As both your portfolio and exposure grows, Umbrella policies provide additional cover for you and your businesses. They can go over multiple lines of commercial coverage as well – meaning if you have a professional liability policy, commercial auto policy, etc. your Umbrella policy can extend to each of them.
These are just a few of the tips Woedl offered. Make sure to speak with your insurance carrier for specific coverages and what is available for your properties and your businesses. There is no right amount of insurance, it is really up to you to figure out what you need and what you are comfortable with.
To learn more from Woedl you can find excerpts from his book, Debunking the 13 Insurance Myths in Think Realty Magazine or by becoming a member of Think Realty to get access to the digital version of the magazine.