INSURANCE TIPS FOR REAL ESTATE INVESTORS FIVE INSURANCE

INSURANCE TIPS FOR REAL ESTATE INVESTORS FIVE INSURANCE MUST HAVES TO ENSURE YOUR PROPERTY OR PROJECT IS PROTECTED BY HAROLD NEWBILL, CIC, AAI, CISR

INTRODUCTION: HAROLD NEWBILL MCCLATCHY INSURANCE AGENCY • Harold joined Mc. Clatchy Insurance Agency in 2004 working first with his father Bill before becoming the Agency Owner in 2011. With over 15 years of experience advising Real Estate Owners and Investors he continues the agency’s 90 plus year tradition of serving the Sacramento business community. His hands on approach to educating real estate owners ensures they obtain the best advice and coverage they need. When he is not walking a property with a client or advising them on how to best protect their business, he enjoys learning about real estate, history, spending time outdoors and motorcycle travel. Harold lives in Sacramento with his wife Kelly and two sons Josh and Sam.

THE DANGERS OF GOING WITHOUT THE INSURANCE YOU NEED OR UNDERINSURING

WHY PEOPLE CUT CORNERS AND DO NOT BUY WHAT THEY NEED • I have been doing this for many years, run my business well / I know what I am doing and will not have an accident • No mortgage or debt to the property • It doesn’t fit the budget of my investment/project • I am a contractor / I know a contractor who says they can build it for less • They don’t work for me, that’s someone else’s problem.

WHAT FACTORS ARE IN THE COST • Property – Age of the structure, condition of the “big four” (HVAC, Plumbing, Roof and Electrical) construction type and style. Price comes down to cost per squarefoot to replace. • Liability – Past claims, dogs, dangerous features such as pools, playgrounds, vacant property, construction area. Past experience at that property or with the owner determines future cost • Course of Construction – Construction cost breakdown, timeframe. • Workers Compensation – Payroll, number of employees, type of work (classification), experience and claims history.

THE FIVE TIPS • TIP 1 - PLAN FOR THE COST TO REBUILD YOUR PROPERY • TIP 2 - PLAN FOR HOW LONG IT WILL TAKE TO REBUILD • TIP 3 - BE PROACTIVE AND PREPARED FOR LITIGATION • TIP 4 - MEDICAL PAYMENT COVERAGE IS NO FAULT COVERAGE • TIP 5 – KNOW WHO COVERS THE WORKER IF THEY ARE INJURED

TIP ONE: PLAN FOR THE COST TO REBUILD YOUR PROPERTY • Questions and Pitfalls: • Cost of materials when you need them? • Will contractors be available when you need them? • TIP: Ask for replacement cost estimator from your agent and discuss based on cost to hire someone to rebuild rather than rebuild yourself.

• TIP TWO: PLAN FOR HOW LONG IT WILL TAKE TO REBUILD Questions and Pitfalls: • How long will you be without rental income or able to sell your flip? • Construction Permitting • Weather Delays • Finding a contractor • Disaster area cleanup delays • TIP: Discuss with your agent what your monthly costs are and make sure your policy has at least 12 months of coverage for lost income. * NAHB Eye on Housing article 2013

TIP THREE: BE PROACTIVE AND PREPARED FOR LITIGATION • Tips For Rentals: • Requiring Tenants to carry renters insurance • Non smoking properties • Repairing hazards quickly • BBQ area or no BBQ’s • Use CAA lease • Have a relationship with eviction attorney • For Flips • Fencing the property • Requiring all contractors to carry 1 Million or more in Liability/ required and verify Workers Compensation Insurance for all employees and subcontractors • Jobsite safety inspection • Keeping new materials locked up/secure

TIP FOUR: MEDICAL PAYMENT COVERAGE IS NO FAULT COVERAGE • Questions / Pitfalls • Having the minimum or no coverage for Med Pay increases likelihood of costly and lengthy litigation • TIP: Purchase the maximum for this area which is 5, 000 or more in coverage.

TIP FIVE: KNOW WHO COVERS THE WORKER IF THEY ARE INJURED • Questions / Pitfalls • Onsite managers who are given discounted rent to manage your property • Vendors such as handymen and landscapers • If they don’t have it, it may fall on the owner if a worker is injured • TIP: Purchase workers compensation and/verify that contractors have it and name you as an additional insured.

IN REVIEW • TIP 1 - PLAN FOR THE COST TO REBUILD YOUR PROPERY • TIP 2 - PLAN FOR HOW LONG IT WILL TAKE TO REBUILD • TIP 3 - BE PROACTIVE AND PREPARED FOR LITIGATION • TIP 4 - MEDICAL PAYMENT COVERAGE IS NO FAULT COVERAGE • TIP 5 – KNOW WHO COVERS THE WORKER IF THEY ARE INJURED

Questions

2410 Fair Oaks Blvd. , Ste 140 Sacramento, CA 95825 (916) 488 -4702 (916) 488 -2336 (fax) harold@mcclatchyins. com