When you need to know what is happening that can affect your business, we try to be a good up to date location.

For Real Estate Agents:

Q: #1  Have you attended the Closing Team class that I now offer?
Q: #2  What is meant by an Alpha Real Estate Agent?
Q: #3  How does a Real Estate agent become an Alpha Agent?
Q: #4 If so many of my current clients may be paying too much for flood insurance, is there anything I can do about that?
Q: #5 How do I find the current date of construction when I list a house?
Q: #6 Do you know how important the date of construction is to insurance?
Q: #7 Do you have an LLC for your real estate business?
Q: #8 Do you have a Personal Umbrella Liability coverage?
 
For Investors:

Q: #1  I am a renovating property after I buy it. What should I be aware of insurance wise?
Q: #2 Will your current insurance carrier extend liability to any investment property you purchase?
Q: #3 Do you have an Umbrella Liability Policy?
Q: #4 Have you discussed an LLC for your investments with your attorney?
Q: #5 Is your property manager listed as an additional insured on all investment property?  Why should they be?
Q: #6 Is your lender paying for all your insurance policies?
Q: #7 Because of excessive flood losses across the country many lenders are starting to require flood insurance on new loans.  Do you want to know how little it could cost in every state? 
Q: #8 Why is it important to purchase Flood Insurance?
Q: #9 In many hurricane and tornado prone states insurance companies have removed the wind and hail from their policies and require a separate policy written by the state.  Why should you care?
Q: #10 Are you sure your investment property has resident premise liability coverage currently in effect?
 
We have added two new flyers that could be most beneficial to those who own their own business: 

Real Estate Agents                          Investors 

Feel free to print these out and share with others.  If Katrina taught us anything, it was how unprepared many of us were with real estate investments.

Real Estate Agents:

Q: #1  Have you attended the Closing Team class that I now offer?

A:  I now offer classes, either as CE approved for 2-hours through Stewart and Delta Title or non-CE approved in your office.  This class is designed to show you how to reduce your closings from failing due to insurance issues which will save you both time and money. back to top

Q: #2  What is meant by an Alpha Real Estate Agent?

A:  This came out of the Closing team class and it is the result of the listing, selling and lender working as a team.  What this will do is stop 99.9% of closings failing due to insurance issues which will decrease all parties from wasting money and time.  In addition to the MLS will be a new Checklist that both the listing and the selling agent will complete so that all parties can see it.  It will qualify the house as much as can be done so that only buyers that qualify can see it.  The lender will be providing the escrow window amount to the selling agent along with either their credit scores or whether it is over or under 700.

The listing agent will complete the Alpha Checklist which requires the correct date of construction the current flood zone, the Elevation Certificate if the seller has one or his insurance agent, a CLUE report that the seller can get on-line for free that shows the claim history on the property location, the FEMA flood notice if received that shows the flood claim history, any building permits if seller indicates renovations but no permit was done.  Seller needs to check with building department to get a permit so that the buyer won’t have to deal with non-compliance issues later on.  Also, the listing will provide the La. Citizens premiums so that a buyer will know the worse case scenario to be sure that their escrow window can fit so that they can qualify to look at the house along with an estimate of the flood premiums based upon what the seller had AND if the seller’s flood policy is rated incorrectly too high, the insurance agent will check to see if new policy can be grandfathered and advise the listing agent to advise the seller to contact their insurance agent for a refund!  The listing will also work with Preferred Insurance agents to provide this info to obtain a firm quote on the house so that if it doesn’t’ have to be in La. Citizens the premiums could be a lot less.  The Preferred Insurance agent must meet stringent rules that the Broker/Manager will have.  We want to be sure that the insurance agents working for the agency is doing what is best for the clients not themselves.  back to top

Q:   #3  How does a Real Estate agent become an Alpha Agent?

A:  Either through their broker/manager or taking the closing team class and doing it on their own.  Anyone doing this will work smarter and save on time and money spent and the title companies will want to work with you as you are reducing their cost and money spent.  back to top

Q: #4  If so many of my current clients may be paying too much for flood insurance is there anything I can do about that?

A:  Contact our office.  We now offer a new service.  You provide us with an Excel spread sheet of your clients and the property addresses and we will have the current zone run and will do the research to give you the corrected date of construction.  Then we will begin to check for those that are miss rated either in the wrong zone or that should be eligible for the grandfather rule. 

You would send letters to the ones that might qualify for the rate changes and they in turn would call us for us to become their new FLOOD agent only as we will have the proof that we need to save them money and we in turn will notify their current insurer to change their present term and one prior term for the lower premiums AND also for them to notify FEMA to go back an additional 4-years as that is what the law allows.  back to top

Q: #5  How do I find the current date of construction when I list a house?

A:  When you are an Alpha Agent our agency will provide both the flood zone and the date of construction when you are doing the checklist.  If you are not an Alpha agent and want to learn how to do this, take the closing team class where we explain all of this.  back to top

Q: #6  Do you know how important the date of construction is to insurance?

A:  This is the most important question on the flood application and is the number one reason why our citizens are paying too much for flood insurance?  It is the hardest answer to come up with document.  When the MLS shows an approximate date and that info is passed to insurance agents, few will question that date of construction as it can and often does triple flood insurance premiums!
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Q: #7  Do you have an LLC for your real estate business?

A:  You own your own business.  Check with your attorney if this would be beneficial for you to do.  Many of our real estate investors our LLC. back to top

Q: #8  Do you have a Personal Umbrella Liability coverage?

A:  Umbrella Insurance is based upon your worth.  The more you can be sued for the more important this policy is to you.  Especially if you are not an LLC.  It is $1 million or more above your current liability exposures such as your home, car, boat, rental properties, etc.  It is usually sold by your homeowner insurance agent.  back to top

Investors

Q:  #1  I am a renovating property after I buy it. What should I be aware of insurance wise?

A:  It is not only insurance that you should be aware of but FEMA as well.  Be sure that the property you are buying can qualify for a building permit BEFORE you buy it not after.  And, if it does, make sure you do have building permits.  FEMA has requirements that the permit offices must meet and when a property is damaged to 50% of it market value then a building permit is not allowed and you don’t want to buy one of these as these property usually end up having to be raised to the new base flood elevations!

Also, insurance-wise, be sure to purchase renovation insurance. It requires an engineering report showing it is stable and 8 photos, 4 in and 4 out BEFORE the insurance agent can even request a binder.  Also, most of these policies do not include liability insurance so be sure to ask the insurance agent for one under a stand alone policy.  Remember that liability is not required by a lender so they will not escrow for the premiums so when it is due in 12 months, if the dwelling is not finished and the lender pays the premiums they will not pay for the liability.   back to top

Q: #2 Will your current insurance carrier extend liability to any investment property you purchase?

A:  A few of the well known companies may, like Fireman Fund and Chubb.  Always check with them first.  I know that American National does here in Louisiana.  It is less expensive and since the lender doesn’t normally pay stand alone liability policies, this would make sure is was renewed yearly.  back to top

Q:  #3  Do you have an Umbrella Liability Policy?

A:  This is investments and you own a business and a Umbrella is over any liability exposures you may own.  Boats, cars, homes and investment properties can usually qualify for these type policies.  Too many rentals though could require a commercial umbrella not a personal one.  The best way is to first check with your homeowners agent to see what you are eligible for.  They require underlying limits of liability for there policy which starts at $1 million and higher.  Good thing to have as the more you own the more you can be sued for!  back to top

Q: #4  Have you discussed an LLC for your investments with your attorney?

A:  Always check with your attorney to see if this is a good way for you to handle your investment rentals.  Some lenders won’t allow LLC to be the owners as their loans are based on the owners not being a business.  Many of our clients do become LLCs and even list each property under a separate LLC name.  back to top

Q: #5  Is your property manager listed as an additional insured on all investment property?  Why should they be?

A:  It just helps you with the management in that the property manager would also be notified if the policy was canceling for any reason or if additional information was needed.  We discovered with Katrina that a lot of policies lapsed for non-payment of premium whereas having a property manager listed would have reduced this from happening.  back to top

Q:  #6  Is your lender paying for all your insurance policies?

A:  Often at the time of the closing, when collections are done, the investor thinks that everything is being escrowed and that when it is due on the renewal that the lender will pay it.  Often when Liability is written on a separate policy or flood is not required due to the zone, the lender does not pay these types of policies.  They only escrow for what they are required by FEMA to cover, usually property and flood in a special hazard area.  Always check with the lender when each policy is renewed to be sure they paid it or if they should be paying it.  And, when you get the bill make sure it shows the right lender!  back to top

Q:  #7  Because of excessive flood losses across the country many lenders are starting to require flood insurance on new loans.  Do you want to know how little it could cost in every state? 

A:  When flood is not required do to it not being the special hazard zone, if the dwelling does not have a flood claim history, then it is eligible for what we call Preferred rates.  It doesn’t matter where the dwelling is located as long as the zone is B, C, X or A99.  You can find these rates on our website under Publications and Links Preferred rates.  If you purchase the insurance at closing and there is a mortgage, then the policy can be effective immediately otherwise there is a 30-day wait to purchase it.   back to top

Q: #8  Why is it important to purchase Flood Insurance?

A:  Katrina would be a good example.  We had far too many homes in B, C & X zones where flood was not required so they didn’t purchase it.  Homeowners Insurance does not cover flood losses and never did and, of course, we are seeing plenty of lawsuits over this but buying flood insurance takes all the waiting out of the process along with hiring attorneys.  There is a higher incident percentage rate to have a flood loss than to have a fire loss!  back to top

Q: #9  In many hurricane and tornado prone states insurance companies have removed the wind and hail from their policies and require a separate policy written by the state.  Why should you care?

A:  One, it is a lot more expensive to do it this way but the real problem we see is that lenders are not used to seeing this new policy and they tend to not pay the renewal and they lapse. We saw enough of this from Katrina.  It is so important that you follow up with your lenders when this is a separate policy.  This is another good reason to list the property manager on the policies.  back to top

Q: #10  Are you sure your investment property has resident premise liability coverage currently in effect?

A:  The lender does not require this coverage so if you didn’t pay the premium when it was due to renew, then you don’t have it.  In many states, a separate liability only policy must be purchased especially if you bought insurance from a direct writer that offers insurance for just their company.  Usually the Independent agents is where you buy stand alone liability policies.  The insurance is purchased at the closing and paid for but we have found that many lapse after the first year along with Excess Flood policies as the lender only seems to want Excess flood above $250,000 on the initial purchase.  When policies are renewed, often the lender doesn’t pay the premiums to renew and the policies lapse.  back to top