How to Protect Your Investments with Real Estate Insurance

Real estate investments are one of the strongest methods of building up your financial portfolio that can actually help you make more money, but there are risks involved as well, which can easily destroy everything that you have worked for. Water damage, liability issues, or even natural disasters can cause you to lose several months worth of rental income. The smartest investors are not only buying properties; they also know how to protect them. Insurance for real estate investors is an essential component of any smart real estate investing strategy, whether you invest in single rentals or a larger apartment portfolio.

At Moore Multifamily, an insurance brokerage and risk management company, the only goal is to provide protection for your investment income flow. Moore Multifamily provides services for real estate asset managers, apartment owners, and property management executives all across the country. The best part is that Moore Multifamily understands your language, such as NOI compression and covenant compliance.

Want to build a working coverage program? Get your free quote from Moore Multifamily now!

Types of Risks That Real Estate Investors Face

The risks faced by investors are more numerous than most realize. They range from:

• Damage due to storms, vandalism, or structural problems

• Lost rent from the time when the property is uninhabitable

• Legal liability due to injuries to a tenant or visitor on the premises

• Environmental concerns such as mold, asbestos, or lead paint

• Lawsuits related to habitability problems 

Each of the above can cost you dearly, and a valid and well-structured insurance plan would cover all of them.

Why Is Standard Homeowner's Insurance Not Enough for Investors?

This is probably one of the most common and expensive mistakes made by investors. Standard homeowners insurance policies are made for people living in the properties they own, and once the property turns into an investment one and starts being rented out, all this stops working. 

The insurance for real estate investors is an entirely different type of policy, taking into consideration various types of risks associated with renting a property to tenants and other factors. Not having the proper coverage may lead to denied claims when you need it most. And that can cost much more than the cost difference between policies.

What Does Multifamily Property Insurance Actually Cover?

Multifamily property insurance is customized to cater to apartment buildings, duplexes, and other multifamily dwellings. It should have the following coverage:

• Coverage for buildings or structures at replacement cost, rather than depreciated cost.

• Coverage for loss of rents in case of damage to keep revenue going during repairs.

• General liability according to the amount of foot traffic on the property.

• Environmental liability for any mold-related or other habitation issues.

• Umbrella coverage in case the basic coverage limit is inadequate.

Moore Multifamily designs multifamily property insurance policies that are tailored to the risk of the actual property, which may be a new acquisition or an existing portfolio.

How Does Location Impact Your Real Estate Insurance Policy?

Property insurance in Georgia comes with state-specific requirements, lenders' requirements, weather condition risk factors, etc., which could be overlooked by a generalist agent. Investors in Georgia will encounter issues specific to their state, such as risk of windstorm/hail in some locations, special state requirements regarding habitability and landlords' liabilities, special lender requirements for loans from Georgia-based lenders, and local building code updates after a loss.

When you deal with an agency that knows about property insurance in Georgia on the portfolio level rather than on the individual property level, you avoid major problems with the claims. This is the kind of information that you will get only from the specialist that knows your market well.

What Do Property Management Companies Need to Know about Insurance?

There is an additional risk component associated with property managers that is completely unrelated to the risk assumed by the building owner. Your business is at risk for errors & omissions claims due to your management decisions, directors & officers claims, claims resulting from vendors/contractors, as well as resident lawsuits against you for various properties under your management. These risks don’t just disappear simply because you choose to ignore them; you will pay the price if a lawsuit does come through.

Moore Multifamily provides a comprehensive insurance program for property managers that includes E&O, D&O, umbrella, and workers' comp lines in one bundled package. This is the kind of comprehensive coverage you get with a specialty broker vs. a generalist agent who simply tacks on residential insurance coverage to your commercial operation.

Important Steps to Create an Insurance Strategy 

Here’s what you should be doing if you are putting together or evaluating your current insurance strategy:

• Do a policy audit: Determine any gaps or exclusions in existing policies that do not align with your current portfolio size.

• Evaluate replacement cost valuations: Many are underinsured, as their values are based on out-of-date information.

• Review annual loan covenant requirements: Loan agreements evolve, and non-compliance means forced insurance at higher costs.

• Consolidate whenever possible: A single policy covering several properties will provide favorable pricing and coverage.

• Consult a specialist, not a generalist: An insurance broker knowledgeable in investor property needs will be able to evaluate your exposure.

Protecting Your Investment

Time, money, and a sound strategy have all gone into your creation of a real estate portfolio. An ideal insurance policy would be just as much of a fighter for you as you are yourself. Be it multifamily property insurance, general liability, lender compliance, etc., every single aspect of your protection is a fight to protect your bottom line.

Moore Multifamily is an insurance broker that focuses only on commercial apartment owners, asset managers, and property management executives. We are located in Gainesville, GA, and have extensive knowledge about property insurance in Georgia and across the United States, and also we handle any amount of portfolio through carriers and technical know-how.

Don't make your investments vulnerable. Schedule a meeting with Moore Multifamily and get a tailored insurance program today!

FAQs:

How is landlord insurance different from investment property insurance that covers several properties?

Landlord insurance covers only one rental unit and is not sufficient to cover multiple units. Insurance for real estate investors uses a commercial approach geared towards multiple exposures, covenants of lenders, and liabilities.

How does multifamily property insurance address the issue where one of the units becomes inhabitable due to a covered loss?

Multifamily property insurance provides loss of rent coverage that will reimburse you for lost rental income during repairs.

Do Georgia real estate investors require any special types of coverage related to the state?

Yes, property insurance in Georgia needs windstorm exposure, state habitability laws, and specific lender rules for Georgia, which generalist brokers don't know.

What happens if I am not in compliance with my lender's requirements regarding insurance?

The lender may put forced insurance on your property at a very high cost, charging this directly to you, and even causing a technical default on your loan.

Do I need to have general liability insurance if my tenants have renter's insurance?

Renters' insurance will protect your tenants but will not protect you as an investor or a property owner in case there is a lawsuit or injury claim.