By Gloria Cacciatore Turan
Owning investment property can be truly satisfying as you are trying to build your personal wealth for you and your family; however, One must seek caution and collect the correct intelligence to prevent any type of loss that could possibly extinguish your savings!
Here are a few tip from experienced Property and Casualty insurance agents at Jos. Cacciatore & Co. Insurance Agency
- Ask your Real Estate Broker/Agent a copy of the claim history from the previous owner for the past 5 years to understand the type of tenants and/or exposures that may exist in the building.
2. Separate the ownership of the building from your personal name and put under an LLC, Corporation or Land trust to protect your personal assets from your business. Please do not use the name of your business to purchase a property even if you business is located in this building. Building and business should always be kept separately for several reasons:
A. An insurance underwriter will not like to extend liability to your business to write a single building
B. A catastrophic loss from your building can harm your business liability
3. Look into the existing leases and check to see if the Owner of the building is named as additional insured on a primary and non-contributory basis with waiver of subrogation. A certificate of insurance issued to the building owner is only valid and enforced if there is a written contract in the lease. Before you give the keys to a new tenant, please make sure that they submit a Certificate of Liability insurance of at least $1,000,000 per occurrence. This is a great description of why you need to collect Certificates of Insurance
4. Purchase a blanket Workers Compensation policy & Employers Liability Policy: If you have no employees and only 1099, there may be a circumstance in which you hire a worker that gives an excellent quote but does not carry workers compensation coverage. If a claim occurs, you will be responsible for the injuries, loss of pay, etc. This policy would prevent you paying out of your own piggy bank.
5. Umbrella Liability should be purchased in the event your General liability limits are exhausted. https://www.travelers.com/resources/insurance-101/do-i-need-umbrella-insurance
6. Ordinance or Law Coverage should be purchased for buildings that are older than 2000
Make sure before you are insured or receive a property inspection to be Up to Date on the Building Safety Features:
Fire extinguishers in every unit and it must be ABC extinguisher
Smoke detectors should be hard wired and battery operated
Carbon dioxide detectors should be current
Building must have sub pump in order to have sewer back up coverage
Exit signs must be illuminated
Parking lots must be well lit
2 means of egress
no barbecuing or grilling on the porches
Central Station alarm for Fire and Burglar would be very helpful