Our Top Tips for Finding and Vetting a Good Insurance Carrier
In this episode Emil, Tom and Michael discuss the most important factors to consider when looking for insurance. --- Emil: Hey everyone, welcome back for another episode of your favorite show The Remote Real Estate Investor. My name is Emil Shour. And today I'm joined by my co host, Tom: Tom Schneider Michael: Michael Albaum. Emil: So in today's episode, we're going to be talking about how to find and vet an insurance provider. So let's hop into this one. Emil: Alright guys, before we hop in, let's talk updates, what's going on your real estate investing lives? Michael: So I had that six unit under contract I was talking about last time that fell out buyer couldn't perform, I was pretty frustrated with the whole contract of itself. I did a poor job reviewing it, but my agent didn't point out a couple pretty big ticket items that were included in that contract. And so I fired him this morning, and I'm gonna be placing that listing with somebody else. It was an uncomfortable conversation, but I think one that had to be had. And, you know, he asked me point blank, he says, What are you unhappy with the service? And I tell him, yeah, these are my issues that I'm having with it alone as independent issues, not a big deal, but kind of cumulatively, they cause me a lot of heartache. And the other thing I didn't realize is that I had signed a year long agreement with this listing agent, which goes against every fiber of my being. But again, it was something that I rushed and didn't do a good job looking at. So anytime you're signing a listing agreement with an agent, be very particular about the length of time in which that contract is enforced for. Tom: I love these episodes, and kind of respect Atomy stuff, putting a lot of these learnings forward to limit people in the future for making them. So looking back retrospect when you initially vetted this agent, and we'll do another episode, you know, more specific on the agent side, but what would you have done differently? I mean, one, you mentioned the one year listing agreement, what else anything else you would have done to suss out this subpar? Michael: Yeah, he was a recommendation from my property manager who I like quite a bit, and I was kind of looking to get it done pretty quick. So I said, Okay, sure. Yeah, we'll go with your guy. That sounds great. They've already got a pre existing relationship. I didn't think about this other group that I already had done a bunch of deals with, because my agent friend had ended up he had left that group. And so I said, Oh, well just use him for everything. And then he left the picture. So I didn't really have a good person to reach out to so this is a personal reference. Cool, just go that route. But absolutely, I should have interviewed some other folks. But I was looking to get it done too quickly. So didn't listen to my own advice. And yet again, it's come to bite me in the rear. So I don't know why I think that'll stop happening one day, it just clearly is it won't Tom: Good. Take away. Good take away. Michael: Yeah. What about you, Tom? What you got going on? Tom: Oh, not a lot still waiting on this refi close at the Wheelock wine wine wine complaint complaints, snail mail, blah, blah, blah. I just listened to our last week's episode, kind of related kind of unrelated, we're going into another week of bad air and in California, these fires and my wife are playing around the idea of Oh, you know, what if we you know, live or move around a little bit and one idea remote real estate invested kind of relating is like what if we like bought a house in an area that we are bullish on investing, you know, bought one probably more of appreciation play in like a Raleigh or like a Columbia, South Carolina or, and we go and live in it for like six months or a year, rent our house here in California, and then come back to California. And we also have, you know, turn that other one into a rental. So playing around with some kind of like exotic owner occupied slash turned into a rental slash bounce around, we have a son right now and be fun to get a place that has a big yard to let him run around at least for a year in his life. And who knows, maybe just fall in love in Raleigh, it's probably unlikely, but it's not out of the realm of possibility of doing some exercise like that. So Michael: Do it. Emil: Tom, we had someone on the podcast who basically did this like not in as short of a timeframe, but moved from city to city picked up a rental house hack did live there, and then change it to a rental when he left that city. So not a bad strategy. Michael: He just left this slug trail of rentals in his wake. Tom: I love that idea. And it's like your cities are fun. Yeah, go from each one to one. Michael: And not only that, but new cities are fun. And depending on the purchase price, too. It might never make sense as an investment property when purchased as an investment property. But if your interest rate is such that your your financing is such that it's so much cheaper, you may have just created the potential for a rental where there previously wasn't one. Tom: Yeah, exactly. And I think that really drills The advantage of this kind of strategy is you're like you're going sub 3% on these like awesome fixed 30 year products and buying it as an owner occupied because that's what you're initially going to do. And then your slug trail just moves away. And then you still have the remnants of this really historically awesome financing. And a house that normally where you wouldn't be able get the cash flow since you're having such incredible rates. So I don't know. We'll see. We'll see. It's a pontificating. Michael: Nice Tom: thinking about it. Yeah. Anyway, that's my update. Michael: And Emil? Emil: An update for me. We put an offer on a four unit property yesterday in St. Louis, where I'm looking right now and it was priced really well it's priced under 100 K, which is really rare to see the neighborhood's okay. Probably like a two star neighborhood rating if we were to equate it on, like Roofstock scale. But 700 k newer mechanicals, right like new new h fac new water heater, new boilers. But the insides of these apartments are a little dilapidated. But that seemed like an easier first project and kind of like full gut rehab and like new mechanicals and everything, so it kind of seemed like it was it was gonna be the right property. We put an offer in yesterday. But the seller I got noticed today that seller went with a different offer. So onto the next one. Michael: Are you going to put in a standing backup? Emil: I don't even know what that is. So no. Michael: You should put a standing backup offer is basically saying, hey, if that buyer can't perform, I'm willing to still buy it at your offer original offer, or some other offer. And so the seller knows that, hey, okay. I don't have to go call these for other people that also submit offers, I can go to Emil, because I know what his offer is. And it's still good on it. Emil: Yeah, I should just talk about that. We just left it as let's keep our eye on this. And if it falls through, we'll go back. Yeah. Michael: But the standing offer is nice, because it kind of separates you from any of the other people that are also doing that. And you're saying, Yes, I can perform. Yes, I will perform, should it become available. Tom: Love that idea? Emil: Is there any let's see, I find something else. And I get into offer on something like it's not like binding? Michael: No, not by any means. Not by any means. Emil: Well, then I have a nice action item after this episode. Thanks, Michael. Michael: You’re welcome man. And so kind of to Tom's question. What would you have done differently? Or if anything on that knowing what you know, now? Emil: Nothing I think… Michael: Perfect. Emil: I made an offer where I was comfortable. I made an offer where I was comfortable and let the chips land where they, lie where they land? It takes 2 to tango? I don't know. Michael: There is no crying in baseball. Emil: So yeah, no, I felt good about it. It was a I hadn't made an offer in a while. So it's good to just at least start making some activity and start pushing through again. So Tom: That's a funny little dopamine. I'm probably like six or eight months since I've made an offer. It's like, oh, man, we would feel pretty good right now submitting an offer. Emil: It's also nerve wracking. And even though you've done it a bunch, right, when it's been a while and you're back at it, like you look at your spreadsheet numbers look good. Still. There's something about like, going and actually making an offer. That's a little nerve racking. I don't know, Michael: I remember the first offer I made. I was like, I hope they wait so backwards. Yeah, Tom: I know. Yeah. It's like, Oh, I'm a sucker if they you know, accept it right away. And I know, right? Did your work? You're okay. Right. What a funny psychology. Emil: Yeah, of it all hundred percent. Michael: Emil, I love that you wouldn't change anything. Because I think we talked about on previous episodes, we should be really looking to evaluate the decision making process, not the outcome. And so it clearly you did your homework, you felt good about it. And the fact that you wouldn't do anything differently means that I think you executed really well. And now it's out of your hands. Emil: Thanks, man. Yeah, it wasn't like emotional at all, like, here's what I can do, here's what would be a good deal for me, and you lose enough offers. And it's just, it's on to the next. Right, so it's all part of it. So let's move on to the topic for this episode, which is how do you find and vet an insurance provider? And we're gonna start with when in the process? Do you go out and find insurance? Is it before you make offers is it during escrow, I can actually leave this one off, I don't have a ton to add to this episode, not my area of specialty, but I can add to this one. So for me in the past, I have typically looked for insurance once I have a property under escrow, that's when I'm going out and looking for insurance. I don't really do any upfront before I go and buy any properties. What are you guys? Tom: Yeah, so the first thing I'll do is get kind of guidelines on estimating how much insurance is going to be. And I would just put into two camps like a property is either in a zone where I'm going to have to pay extra because maybe it's a hurricane or tornado or or it's not, it's an it's an area that's relatively low. So just for like proforma purposes, have a rough idea of where I'm going to be paying for insurance. And this can be talking to other investors, forums, whatnot, and actually selecting an insurance provider. Oftentimes, I'd say your first deal is like, when you add extra properties, a lot of times you're using a similar and maybe there might be some cases where you're not, but I agree with Emil, and that it's something that I won't spend a lot of Midnight Oil, there probably is some improvements you can get on pricing and going through a lot of different ones, but it's kind of similar pricing, there's not going to be just these wild swings, unless in some areas where there is like hurricane stuff, but generally speaking, it's a pretty commodity. So it's it's similar answer to him, you know, we're all get something in escrow. And specifically, I already have insurance providers that I like, just layer right on top, Michael? Michael: Yeah, perfect. I'm pretty similar. I'm also waiting, I think partially because it's such an like, I'm not gonna say easy task, but it's a fairly quick task to have done. This isn't a very long process. So I can be on the phone with an insurance rep in the morning and have a quote by the afternoon and so it's not something that takes a long time that they need a lot of documentation for and you also need to have some specific property information, some property specific information, to answer some of the questions to get an accurate quote, like, what is the year of the roof? What is the year of some of the mechanicals? When was the property last rehab. So if you don't know any of those things about a property, it's tough to get an accurate quote for. But Tom, I'm actually going to disagree with you on the commoditization of insurance. I think that there are some vastly different rates out there from different carriers. And so I think it's really important to kind of compare and contrast them, I was chatting with my commercial insurance broker. And he was telling me that if we had to go place my current portfolio with a different carrier, it would probably be about a $15,000, delta in coverage. And for like, less coverage, for less good, I guess that's a, that's a phrase coverage. So I think that there is a significant difference between carriers. And of course, there's a large portfolio. So those numbers are magnified. But even on single family homes on single units, or duplexes, there are carriers that do this stuff really well, and that are hungry for growth. And so they're going to be priced really competitively. There are other companies that are not looking to grow are not interested in that risk, like a property or a certain style of insurance is called a risk. They're not interested in that. And so they're going to price it because they don't want it but they're happy to take your money if you're willing to give it to them. So kind of like general contractors, if they're really busy, they're gonna throw out a ridiculous high bid, because they don't want the work. But they're happy to do it for that price. Same thing with insurance carriers. So I would definitely look to interview several different and get several different quotes. And we're going to talk here on this episode about how to do that effectively here in just a little bit. I Tom: I have no come back. I think you're right. I mean that in the sense that like once you have a carrier that you like, it's pretty plug and play. But some of the other like big moving variables is like deductible amounts, which we'll talk about a little bit more is there can be some weirdness in the way that they're applied. For example, if the premises occupied versus vacant, we were actually talking about before the episode that I probably need to change my insurance on just looking to improve it and that I haven't changed in a while or shopped around and probably some shekels to save and some liability to limit But anyways, Michael, good challenge, and you win. All right. Michael: I've won the day. Tom: It was a test and you pass. Emil: Tom, you bring up something good that I forgot to mention is like getting an estimate first, obviously, like in order to make an offer, you should not like have a an assumption for what his insurance is going to be ballpark estimate. So that is definitely a good point in like putting a ballpark. And I think you mentioned a couple ways to find that. So good point. Michael: Yeah, just to piggyback on that to Emil, Tom, you bring up an amazing point that there are these outside coverages that are not part of a standard insurance policy. And for everybody listening, those are typically going to be flood, and earthquake are going to be two separate policies that are not going to be covered on your standard policy. So if you are purchasing a property in a flood zone, or in an earthquake zone, be aware of that. And that can be found out by simple search, you know, flood zones in this area, or earthquake zones in this area. And if you plan on purchasing those insurances, there's additional costs there. And most lenders are going to require that you're going to carry flood insurance, they are not going to require you to carry earthquake insurance for the most part. And so talk with your lender about what it is that they're looking for. And in coverage. So hurricanes kind of tricky, because the way that the insurance works is typically based on the initiating events. And so if there's a flood, if the property receives water damage, as a result of the waters coming from the ground, they might not cover that could be called considered a flood. But if you left the window open, and then the rain got in, I don't know, I think it's important to make that as is their separate hurricane insurance? Tom: I believe there is and I think it's also extremely expensive. I remember a couple of years ago, Roofstock He was like a different investor that I knew there was flooding, and they didn't have flood insurance. And the house happened to get hit by a tree. That was I don't know if it was moved by the flood or whatnot. But they were able to argue that it's the tree that hit it. Like it wasn't the flood, it wasn't the flood, they're able to collect on their policy. And I mean, the water I think was going to cause you know, massive trouble for the house. But since the house got hit by a tree, they are able to be okay and collecting insurance to fix the property. But if it had not, it's like a funny thing. If there's like disasters, you're just like rooting for certain things to happen. You know, to be able for your insurance policy. Michael: We always used to joke, you know, in the business with a lot of clients and they're like, man, I don't want to put sprinklers in my building because I want the thing to burn down because it's like guys, like don't tell me this. I'm the wrong person to be having this conversation with but it's pretty funny. I get what you're saying. Tom: And also just you know, we're not taking lightly like the really tragic stuff with this happens with some people with these workings but it's just crazy with insurance. How one little way of your house getting damaged versus another if the waters is running into it. Oh no, they're not going to cover that. Oh, with a tree, wacks it. Oh, there you go. Now you get full coverage. The other than Sandy is the right word, but just kind of weirdness of it all. Michael: Yeah. So I think this begs the issue of go talk to your insurance rep, whoever that might be, and look to get a very clear understanding of what is covered, and what is not, especially based on the zone that you're in. And so be armed with that information, Hurricane zone, flood zone, earthquake zone, as you are going to look to get quotes, Tom: I think, well, this is an episode like just on floods and hurricanes will bring someone in FEMA or something. So anyways, future episode, let's we'll continue on. Emil: Alright, so let's segue into how do we actually go out and source different insurance providers wants to take first crack at that? Michael: The interwebs. I like online reviews and searches of different carriers and providers. And a distinction I think that we should make here is the difference between an insurance carrier or an insurance agent, or an insurance representative or an insurance broker. So a broker is kind of like a mortgage broker, and that they might not work for a specific company, they'll go out and shop the market and find a good product for you. Again, just like a mortgage broker would, and insurance agents often will work for an insurance broker. And so they're just kind of like a real estate agent. And so those can just typically be employees of the brokerage. And so but you can also have direct agents that work for a carrier themselves, like if you call up State Farm, you're going to talk to an insurance agent, but they're only going to be able to sell you State Farm Insurance. Now, they might be able to sell you something else if you don't fit into their program. But traditionally, they are going to try to place you into the State Farm program. So you can have agents that are independent, you can have agents that are work for specific companies, and go back all of our listeners to go back and listen to the insurance episode we had Nick Aube on. He's an insurance broker, I think is what the term he coined himself. And that is Episode 26, where we talk about insurance and insurance needs of investors with Nick Aube. So he talks about the differences in insurances and some terminology there. But so it's I think it's hard to make that distinction. And understand when you're calling someone, what type of insurance they are going to be looking to sell to you, whether it's direct from that company, or it's they're going to go out and shop the market on your behalf. So all that being said, if you already own a property, if you own your primary, you can just start with the insurer of your primary, if you're satisfied with that insurance, just like for lenders, if you already have a preexisting relationship, wherever you do your banking, you can work reach out to those lenders to start, then online reviews are really good for folks both of brokerages, as well as companies specifically, but also take that with a grain of salt, because typically the people that are leaving reviews are the unsatisfied ones, the ones that are really pissed off. So again, take it with a grain of salt, but asking for referrals and references from online forums from you know, Bigger Pockets. Or if you're in the Roofstock Academy, we've got a whole list of vendors that we're putting together for everyone to utilize. So ask people that you know that have done what you're looking to do who they've used. Wow, rant over. Sorry, guys. Tom: I'm going to synthesize the rant a little bit of the way that I think about it, I would think about this for any type of vendor that I'm adding at the top of the hierarchy would be personal references, you know, not the end all be all, but definitely my favorite way of referencing any type of vendor insurance. The second layer down would be professional references. So if I'm working with a lender that I like, you know, hey, do you guys have any authors and you know, whatever, an agent or a property manager, that would be kind of a tier two way of sourcing a level three would be forum so our friends at bigger pockets have awesome discussion board. Roofstock Academy has a private Slack channel, the people are popping in recommendations and experiences all the time. And then lastly, at the bottom would just be the the old Google search. So to paraphrase personal references, professional references, online forums, and then general research. Emil: Awesome. We've mentioned it I think on the last episode, asked the other people on your team for references for other people on your team. So ask your property manager for an agent or insurance or lenders so you can you can always ask the members of your team if they have any references, if you don't know any other investors in that area. Tom: Yeah. And on that team, like specifically, your lenders often working fairly close within their network. They have insurance anyways. Sorry, go ahead. Michael: I just want to take a moment to address everyone talks about the team so often, like us included, and I think I just want to put it out there for everybody listening in case they don't know. This is like a very informal thing. It's like my team has jerseys with the team name on it. Emil: You don't? My team, we all have the same jerseys. Yeah, we have our nicknames on them! Michael: Oh dude, I am severely lacking. I just think it's so funny because we always hear about the team. And when I first started investing, I was like God, like, I don't have money to pay my team players. I don't understand, but it's just a very informal relationship. I use the same lender as my I can there on the team, I use an agent, I can pick up the phone, and they'll answer Oh, hey, Michael, how's it going? If that's the relationship you have, that's probably someone that's on your quote unquote, team. And so I just don't want people getting bogged down with, oh, I have this formal relationship. And I interviewed this person. And I asked them formally, would you like to be on my team? It's, it's not like that. So for anybody listening that thought that we can just clear that up and hopefully ease a little bit of heartache. Emil: It's a good point. Michael: Thank you. Emil: All right, let's keep it moving. So the next part that we want to dissect is, what are the questions you should ask, as you're vetting these different insurance providers to make sure you're getting good insurance? And that you're covered as much as you need? Do you guys have any tips here? For our listeners? Tom: Sure. Sure. Sure. So in the same way that I would categorize different lead sources, I'll categorize the high level types of questions that will ask the lender, I'll ask questions about the business, you know, how long they've been? Do they have a lot of different branches? Like at what areas? Do they do insurance in? Not every insurance company will do insurance everywhere. Do they work with a lot of investors? And then maybe go into some of the specific product details? What type of properties do they provide insurance on? Like, is it do they do like multifamily, small apartments? SFR? Maybe like a makeup of their typical type of customer? Like, are they doing a lot of work with investors, I would also ask questions around communication. So you know, who's the main point of contact? What's the best way to get a hold of them? And then get into the money related question, I'm stealing all the content from Michael. So I'm sure. Just also Michael's way more knowledgeable on this stuff. So he's going to have an easier time coming in and layering in extra good nuggets. So my other category would be around rates, and criteria and performance. So do they have various rates as it relates to deductibles? And do how do they value the house? Is it replacement value as an actual cash value? Do they have any discounts as it relates to doing in bulk, or, you know, adding on other products, and then the process of how claims are handled? So Michael, I'm gonna let you keep running with it before I pick all the good stuff. But even though you are gonna have good stuff, no matter what. Michael: I think, a super good outline an overview. So I think it's also important to understand again, who you're speaking to, and are they a direct writer? I mean, are you talking to like a State Farm type of agent? Are you talking to a broker who can shop the market, they're likely not going to be able to answer these questions. If if they're kind of a broker, you're gonna have to wait until they get a quote, for a specific carrier to start talking about some of these companies specific questions, but they could tell you absolutely, who they work with a lot. And something that I've realized after dealing with a couple outrageous claims is, it's really important to ask them if they're a broker, and they give you a quote for a specific insurance company, how much of their business as a brokerage comes from that one insurance company, because what I found is that there are agents that will favor insurance companies, because they're kind of in cahoots, so to speak. And so they'll want to write a lot of business with this carrier, because the carrier will give them good commissions. And so it might not necessarily be the best product for you, it might be the best product that they have available through that brokerage, but it might not be a good fit. And so you want to talk to that's why again, can't over stress this enough, you want to talk to multiple agents, multiple brokerages and see what insurance companies different brokerages have available to them, because some brokers don't even have certain carriers that they can't write with. And so getting an idea of who they even are eligible to place you with is going to be very helpful, in addition to understanding who the best carriers are for investors in the area for your specific kind of risk. So if you have a single family home, go look to understand that market who's writing the best single family home policies out there, and then go look to find a broker that can write with them, or see if they'll write direct and you can call the company directly. Ask them about what their insurance rating is, you know, once we get to the company level, ask there's a rating system out there best and then aam, I think it's Standard and Poor's, I think are all rating agencies. And so they're going to have a letter grade associated with them as a carrier. And so we're gonna want to understand just what that rating is. And then of course, asking, like Tom mentioned about discounts a big one and a common one is a multi policy discount. So if you have multiple policies, whether that be your auto your home, multiple investment properties with them, that can be great to ask about and then asking about a discount for years in which you are claim free can also be a nice one like All State, I think is someone that does that for auto insurance. Don't quote me on that, but I think I've seen their advertising on that. So asking about what discounts you're eligible for what discounts exist, and then asking about if they're, if you're able to grow with them with that same insurance company, I think are always to position yourself to win. Tom: Hey, Michael, for those rates do want to do a quick run through of like key decisions just talking very quickly about deductibles and replacement value. And, and I'm just looking at a spreadsheet of different rates, like what are those mean? Michael: Yeah, absolutely, it's a really good question. So the deductible is the amount of money that you have to pay as an owner out of pocket before the insurance will come into effect. So let's say I have a 20 $500 deductible and a tree falls on my house and causes $5,000 in damage. Well, if that's a covered loss, I can submit a claim to the insurance company and they'll come out. And they'll say, Okay, yeah, it's $5,000 claim, I get the bid to have the work done to repair the damage. If it's $5,000, I'm on the hook for the first 2500. So the insurance company is going to cut me a check for the second 2500. So changing the deductible changes the amount of we call it in house risk that someone is taking on themselves. So if I lowered that deductible to $1,000, I would pay the first thousand and the insurance company would pay the next four, again, in that $5,000 damage example. And so for that lower deductible, I'm probably going to be paying a higher premium. And a premium is just the annual cost of the insurance that I pay to the insurance company or carrier. So lower deductible, higher premiums, higher deductible, lower premiums, but I would say look very closely at the difference in premium for a significant change in deductible. So I found, for example, that, you know, changing my deductible from 1000 to 2500, only saved me like 60 bucks on my annual premium in one example. And so it wasn't worth it for me to take on the extra 2500 in in house risk for 60 dollar savings a year. If we do the payback time on that, let's just see run at 1500 divided by 60 bucks, that's 25 years to get that premium savings back to offset the extra risk that I'd be taking in house. And that's a personal decision that every investor is going to look to make about Okay, how much risk Am I willing to take on personally and what deductible makes sense for me. Then the replacement value versus actual cash value? These are two different types of policies. And so you want to look to understand, like you mentioned, Tom, what type of policy Am I being quoted is the replacement value and actual cash value. These are often seen as acronyms on the policy as RC for replacement cost, or ACV, which is actual cash value. And so most insurance companies, for the vast majority of single family homes out there, you're going to see a replacement cost or replacement value policy. But in a lot of commercial buildings or bigger buildings or older properties, they're only willing to write an actual cash value policy or an ACV policy, because it's just so expensive to insure the building to replace it like for like, because it's older construction typically is going to be beefier and more components. So it's just more expensive to insure. So they'll insure for an actual cash value, which is basically accounting for depreciation of the structure itself. And so the dollar amount of an ACV policy versus an RC policies typically going to be less. And so talk to your insurance agent or provider about what the difference is in those policies mean for you as an owner when it comes time to file a claim or for dealing with the claim, because they are vastly, vastly different. Emil: Dang! Tom: Great, great overview I dig it, I was looking through on some of my policies that I have that I may be changing out in the not too not too distant future is my deductible moves depending if the property is occupied or vacant. And Michael is doing give me a little bit of coaching is asking me, Hey, is that does that start right away? Or is there a grace period from the time that a vacates and it's, you know, my answer was? No, it starts right away. And it's the trigger to go back and get some updates. You know, a cool thing about insurance policy is I think we might have talked about it, maybe last episode is that it's pretty easy to change out in that unlike other types of these relationships, like a lender, you can basically sign an insurance policy and at any point in time change that and Michael, please correct me if I'm butchering that explanation, and word it better go. Tom: No you're spot on. It's just a it's a very fluid policy and agreement in that if you are unhappy or you want to change your policy mid year, they'll refund you the prorated amount. But depending on how you pay if you pay in full, you pay the full premium at day one, you decide that you want to change carriers six months down the road, you'll get refunded that six month premium payment, and then you can go place new insurance. Now you want to be very careful on the timing of this such that you don't have any insurance lapse because Heaven forbid you're canceling your insurance on a Monday, and then you place new insurance on a Wednesday. Murphy's law says that something's going to happen on that Tuesday, right there's gonna be a fire tree or something. So make sure that you don't have any lapse in coverage. And so be very communicative with the old carrier and the new carrier about when you want to bind that policy and having them seamlessly transition is really important. Same thing for your lender, your lender is going to require notification that you're changing, the insurance companies will take care of that notification. But you really, really, really, really, really want to make sure that you're having lapses in coverage. And so be overly communicative with all the parties involved, about the dates and timing of when that change is going to happen. Tom: And that feature of being able to change it out, it puts less pressure on me to find the perfect policy up front, like, oh, plug something in that is good, like not letting great get in the way, if I find a house that I want to buy, great, awesome, move forward. And I know that I want to tease out, you know, getting that best rate and best coverage, that's something I can do later, I don't have to stress myself out and making sure, but great be the enemy of good on that initial coverage. Michael: Yeah, it's a super good point, I just changed up my insurance program for all my California properties. midterm, I said I was getting quotes for renewal. And that's something you'll get every year, the insurance company will send you out a renewal package, which basically has Okay, this is what your new rates and new coverages look like. And those will tend to go up over time, just because of inflation, cost of materials goes up. And so you'll get the needed coverage will also go up. And then of course, the premium that you're paying will also increase. And so I was just really dissatisfied with the agency that I was working with who had the policies in place, as well as the coverages from the carrier's themselves. So I called up a good buddy of mine who's an agent, and I said, Hey, quote this for me, and he got me some really competitive quotes. And so I moved everything over to him. And now I'm getting refunds from those carriers because I cancelled mid mid term. So don't be afraid to quote unquote, fire your agent or fire that insurance company if you're not getting the service or the coverage that you feel you need are entitled to. And again, remember these folks work for you. And they are in business to pay claims. That's an insurance company's one job. And if they are unable to do that, well, well, then why would you be working with them? Emil: And so on that note, what are some red flags people should be on the lookout for, as they're vetting different insurance providers? And you guys might have already mentioned them, but maybe just summarizing them here. Michael: Yep, poor claims handling record, I think for me is is a big one, if you have to fight tooth and nail with your insurance company to get paid out on a claim, it's not worth the extra savings that you might see on your premium. Emil: How do you find that out before it's too late, though, online reviews, and again, kind of taking those with a grain of salt. But when they're talking about claims, specifically, I think that's one that we can look at. And also talk to the agent or carrier about what their claims handling process looks like. And what their what their rating is what their insurance rating is, with, with some of the rating companies out there. They should be touting their claims handling record, if they're a great carrier. And I'm personally having been through some awful claims and happy and willing to pay more for that coverage. Because I know it's going to get handled, not if but when I have a claim. Tom: It's great point I like that. I would ask about the renewal process. And I went through renewal a little bit ago just kind of accepting what they what they're sending back, which his answer is I'm gonna go be a little more proactive on this, you know, went through the process, there was like three different websites like one for paying one for site, it was super kluge. I went through this process, I paid them for all different properties that I have. And then I start getting notifications from my lender that my insurance expired and that they have paid for lender provided insurance because insurance companies will do that. But the problem when insurance companies do that is they're they're basically going to be like not a good shopper at all, and just give you very expensive insurance. Michael: So wait, Tom, do you mean that the lender will do that the lender will go out and buy insurance because… Tom: The lender buys insurance. Michael: Because you said insurance companies will do that. Tom: Sorry, lender. Thank you, thank you for correcting me. So the lender, they'll do lender will purchase insurance on your behalf and just hold the payments in escrow. So I, this happened to me just within the last few weeks where I you know renewed my insurance policy, which is an okay policy, and then I get notification from my lender that they're going to shop for insurance like there were some dropping the ball and communication. And at that same time my insurance provider mailed me back a check for the amount that I had paid to renew my insurance, and it's just a quagmire, just a little bit of a mess right now, which is that is on my list of things to do is clean up that mess. So that the renewal process just making sure like I'll probably put in like a negative review, just in this has been just such a clunky process. So asking him about the process of renewal and looking at the new rates and making sure that is a smooth process. So that would be mine. And then also I mentioned before looking at moving deductible rates like I don't like that is something I didn't look into when initially selecting the provider. So you know, having someone you can kind of who is knowledgeable in this space like Michael is a great example to kind of bounce these ideas off of is a helpful resource to have. Michael: And something else I would look for too is is the person you're speaking with, either at the company direct the carrier directly or broker willing to educate you and kind of hold your hand through the process if you're not super familiar with insurance, because I think it's not something that's taught in school, you don't learn about it. We covered you know quite a bit in the academy about some things to look out for. It's some questions to ask to arm you to go have those intelligent conversations. But I would argue that an agent's job is split half between education and half insurance placement. And if they're not willing to take the time and walk you through and talk to you about some of the coverages that you're looking that you should be considering or looking for. That's kind of a red flag for me. And I've had conversations with agents. And this isn't me tooting my own horn, but I've structured some of the policies in certain ways. And they're like, Oh, well, it's a really good idea. And I'm like, you should be telling me what the good ideas are. Why am I coming to you with that, like you do this for a living? So I would say, you know, look to find someone who's knowledgeable and who's willing to walk you through this process. Tom: When you get a quote, Michael, you asked them for like three different versions, like on like, okay, a 2000, and 1500 and a 5000? Is that like, pretty standard practice? Michael: Yeah, exactly. And so I'll build out a skeleton quote of what I want as kind of a minimum, I'll send it to them. So it's not a back and forth quoting thing, we'll look to get a kind of massage to where I want it to be. And then yeah, I'll do exactly that. I'll have the lowest deductible, your next highest and the next highest, just to see what the difference in premium is. And then of course, we can look to massage, different line item coverages at different values, if they are movable, to see how the premium gets affected, because you want to look to see what levers are going to have the biggest impact. And I think so often, unfortunately, deductible isn't one of them. It's typically the underlying coverages themselves that are going to have some of the biggest impact. Tom: Love it. Emil: Great advice. All right, guys. Lots of good information here. I think it's a good spot for us to wrap this episode up. What do you guys think? Michael: Totally. I think if anything, you know, wasn't making sense. Please go back, give it a read. Listen, there's a lot of stuff in there. And so you know, take notes, listen to it again. And don't hesitate with any questions for your agent for your carrier. Again, they should be playing an educator role. Emil: Not to make this sound too much of an ad but as always, there's only so much we can cover in a 45 minute or one hour episode. And Roofstock Academy which is our coaching and training program for investors can get a lot of your personal questions answered. Talk to Tom, Michael, myself, other investors on like really specific situations. So feel like you need more help, or just want to, you know, improve your real estate investing, go check out RoofstockAcademy.com. And, as always, make sure you guys subscribe, leave us a review. Let us know what you think of these episodes and we'll catch you on the next one. Happy investing. Michael: Happy investing. Tom: Happy investing.