Dave Teach Call with Insurance Broker Michael Shadeed – November 12, 2014

  • What type of rates you can expect to see on different deals, in different areas of the country
  • What drives insurance rates to be higher in certain areas?
    • Quality of the property is the main driver for costs outside of geographic influences
      • Probability of fire, and severity
      • Frame is highest risk
    • Wind and Hail coverage
      • Can be a major driver, depending on the level of risk for tornado, hail storm, or hurricanes
      • Anything in a hurricane exposed area will have varying levels of risk, driving prices considerably
      • In non-hurricane areas, you can still pay extra wind and hail premiums due to hail storm history and tornadoes
      • Instead of adding costs to the premium, sometimes companies put higher deductibles onto policies to effectively remove coverage for the roofs
    • Flood Insurance
      • If your loan determines that full replacement costs must be purchased for flood, this can dramatically affect insurance pricing if your pro forma didn’t include these assumptions
      • An initial review of the FEMA current flood maps is free on their site
      • Flood maps change constantly, don’t assume anything on flood ratings without verifying
    • General Liability Insurance Pricing
      • Varies by state, anywhere from $20 a door to $120 a door
      • Is based upon the litigious environment of the state, NY and FL are the most litigious and highest premiums
  • Dealing with Lender’s Requirements while keepings costs as low as possible
  • Main area for negotiation is the ITV (insurance to value) of the property
    • Replacement Cost
      • The price to re-build the asset to income producing again after a complete loss
      • Market value has no influence on Replacement Cost
      • Marshall and Swift provides third party reports to help negotiations
      • A good insurance
    • Deductibles
      • Can be negotiated, depends on level of risk you’re willing to retain
      • The larger the portfolio, the more value in paying for small claims yourself and retaining a large deductible
    • Flood Insurance
      • If your property is found to be in a flood zone, all buildings outside of standard risk will need coverage
      • Typically 10% of the full replacement cost is needed for coverage, if not more
      • The only way to repeal this coverage is through a LOMA

[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][fusion_button link=”http://remcoaching.s3.amazonaws.com/audio/DaveTeachCallWeds_111214.wav” color=”default” size=”large” target=”_self” title=”” animation_type=”shake” animation_direction=”down” animation_speed=”0.1″]Listen to Call[/fusion_button][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]