Home Insurance Insurance woes…

Insurance woes…

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It all started a couple of months ago when one of my tenants called to say there was a crack in the wall. Knowing that houses settle over time, I didn’t think much of it other than this will be a simple patch with some caulking and a quick coat of paint… boy was I wrong!

Upon inspection of the property, I found a crack traveling diagonally from the lower-left corner of the window towards the lower left corner of the wall; the crack was opened up about 1/4 – 3/8 of an inch down to nothing at the floor. There was also a secondary crack starting at the lower-right corner of the window, traveling up the corner-bead approximately five inches until it met a seam in the drywall and then traveling horizontally towards the adjacent wall and then traveling up that corner to the ceiling. Holy crap! This isn’t going to be a simple fix and so it is time to call in the insurance company in case there is any structural damage going on.

Called my insurance company to file a claim, but the customer service person I spoke with neglected to associate this claim with my rental property, but did so with my personal residence.

Two days later, I received a call from the construction company that my insurance had contracted with to come out and perform the estimate. I gave them all of the contact information for my tenant as I was going to be at work; this way they could work together to ensure the estimator could come out to the property and inspect as soon as possible.

The next day, the estimator showed up at MY door and not to my rental property; this was the first sign that there might be an issue with my insurance. My wife happened to be home at the time and so she brought the estimator over to the property. Without opening up the wall, the estimator could not determine the cause of the damage and recommended that a structural engineer to be sent for further investigation.

The following day I played some phone tag with my insurance adjuster, but when we finally are finally connected I learn that the insurance for that particular rental property had lapsed nearly six months prior! How could this be? I had obviously paid the insurance on my second rental as it was still in force, but somehow this property was missed? Why was I not notified by my agent?

The uh-oh moment!

Thinking back, this is not the first time that this has happened to me. My second property had previously lapsed and my agent never informed me of any issues; I found out only by attempting to make some policy changes.

Why is it that when there is an issue with my personal residence, my agent contacts me, but when there is an issue with my rental properties I hear nothing? This behavior appears to stem from the fact that technically my home and my rental properties are insured through two different companies; one being a subsidiary of the second and they do not share data. When you talk to your ‘agent’ about your personal property, they have no issue looking into their computer and bringing up whatever it is you need, make any changes necessary, etc. But when you ask about changes or specifics of your policy regarding one of the rental properties, they have to jump on the phone to find anything out. This should have been a red flag for me in the beginning when establishing the policies; but what the hell do I know, right? I’m not an insurance agent, I’m just a guy that owns a couple of rental properties that need insurance.

So finding out that I was no longer covered by insurance, it was up to me to bring in the right people to inspect the property and identify the source of the problem. In this case, this was fairly easy as I have a friend “in the business” and had him take the lead on making sure everything was taken care of.

Once the wall was opened up, he determined that this was just due to some basic settling of the house and the drywall broke in a diagonal manner because the sheet of drywall had previously been cracking in the manner and it was only a matter of time for it to finally “pop”. A stressful event for myself as well as the tenant turned out to be a two-day job to fix and the house was habitable the entire time. Remove the damaged drywall, hang new drywall, tape/texture, paint. Done! Tenant is happy, I am happy, and my friend is happy since he made some easy money.

Now the true fun begins…finding a new insurance agent for my rental properties.

I started off by calling a local independent insurance company thinking that they will “shop around” for me and find the best rates and provide me with some details. This was actually a little problematic as the agent knew nothing about Landlord Insurance, only insurance for a primary residence and insurance for investors looking to flip properties. My quote was almost double what I had been paying with my previous company; so again I went back to my network of friends. I have an old school mate that is a local real estate broker and she pointed me to an agent with Farmers Insurance.

I gave a quick call to the agent I was referred to and the receptionist quickly jotted down the essentials and I would be receiving a call back with a quote. When I received a call back from the agent, he was AWESOME! He understood exactly what I wanted to do, how the properties are currently being held, and the type of insurance I was looking for; he was an investor himself with several rental properties. I was the easiest experience I have ever had with an insurance company; he really put me at ease. He explained everything to me, faxed over the quote, and after he answered just a few questions from me, I was giving him my credit card information.

A long story short: Do not let your insurance lapse. I don’t care if you simply set yourself a reminder in your cell phone to notify you around the time a payment is due or when you are up for renewal, but do not let it lapse!

Speaking of notifications, does anyone know of a good online program that will do this type of basic service? Notify you when your insurance is due or a place to store your insurance data online? If not, is anyone interested in one? It sounds like something that would be simple enough to develop, but I really don’t want to re-invent the wheel if there is already a service available.

Questions? Comments? Contact DIY Property Manager!
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