Charles:
One small insurance claim and suddenly your premiums jump or worse you get dropped. When it comes to insurance, most investors discuss trying to find the best insurance company. But once you have property insurance, how do you keep your premiums from skyrocketing? Welcome to Strategy Saturday. I’m Charles Carillo. Today we’re breaking down landlord insurance offering some tips to avoid claims and providing actual advice to protect your rental and hopefully help you avoid massive premium spikes. So let’s get started. Property insurance is something every rental property needs and there are not too many ways to reduce your premium or minimize your annual premium increases. However, if your property does not have any claims, it is one of the best ways to avoid a significant increase and it makes it much easier to search for a new insurance company if you want to explore other insurance options. And when you have a claim on your lost runs report, it can last three to five years and it makes it much more challenging to obtain insurance.
Charles:
So let’s talk about some common maintenance tips to avoid a claim at your rental property. Number one is dryer event maintenance. And this is one of the most frequent ways in rental properties that there’s fires. I’ve seen that our properties also we’ve seen as well at properties that I passively invested in. It’s one of the big things that when there’s a fire, it’s usually from the dryer vent and you cannot be present every time your tenant uses a dryer. But you can request that they clean their vent after every load and make it standard practice to have a handyman inspecting clean dryer vents regularly. Additionally, make sure there was a smoke detector above every dryer. And the secondly part with this is that that’s if it’s in their unit. If you have common area dryers, you should be looking at it at least once a week having every time a handyman walks by that those, the dryer room, the washer dryers, they should be emptying out those dryers.
Charles:
Number two is HVAC servicing. So I prefer to handle all HVAC servicing in-house, including filter changes. I know some landlords they say to their tenants, Hey, you handle changing the filters or you know, keep an eye on it, whatever it is, I don’t want to chance it at all. And it ensures that maintenance is performed correctly, which includes changing filters, inspecting drain pans and cleaning drains regularly. But these simple servicing tasks can minimize the chance of any leaks. Now you might say, well people will know if their AC stops working or if water’s coming out of it, yes, but if they’re traveling, if they’re not there, this is when those leaks can get really massive really quickly and you know, just a day or two of if that AC doesn’t turn off or something like that, it can, you can have a a serious leak that happens in that property that goes down into other units and that’s gonna cost thousands of dollars to fix.
Charles:
Number three is water heater replacement. So don’t wait until a hot water heater leaks or bursts before replacing it. Hot water heaters should be replaced at least every 10 years and when you replace them, ensure that you write installation date on the unit and record this information in the properties notes for the unit. It is best practice to instruct handymen to inspect the HVAC and the water heater every time they are in a unit. This is one thing that you know it’s gonna break. Like dude, you don’t have to wait and say, oh can get another gear out of it. Can another year out of it. Once it does, you’re not gonna have your handyman ready to put it in. You’re not gonna have the best price on the water heater. It’s gonna be probably over the weekend or something like this. It’s gonna be extremely expensive.
Charles:
If you see them start getting old, change them. And when you’re buying a property, make note of it and this way you say, okay, this in the next three months we’re gonna do this and this. We’re gonna do these water heaters. They need to be done. And these are important things because once that goes you can have massive problems in your unit. And the thing too is that they might not even know. Those tenants might not even know unless they go where that water heater is, that there’s a leak. It might be there for weeks, a slow leak that’s going through, especially if they’re on the first floor and there’s no one down below. So these are really important things that you have to take into consideration when you have these type of appliances and the maintenance has to done wrong. Number four is we’re gonna go outside and do tree maintenance.
Charles:
Now trim and remove large trees that are near buildings and these can become liabilities during storms. And this is especially important if you’re in any type of storm prone area. And furthermore, tree control will also assist with roading control. So it’s gonna make it much easier for regular maintenance on the property. It’s gonna make it during storm time and after storms and that there’s not gonna be issues and it’s also gonna assist with roading control. Number five is driveway, sidewalks and stairs. And this might not be the first thing you think of when this could skyrocket your premium, but any type of real estate investors will know that, myself included is that I’ve been cited before and had to make changes to sidewalks and stairs and driveways prior to having some policies renewed. And this is something that because it’s a lawsuit ready to happen, okay, immediately fix any issues with driveways, sidewalks or stairs.
Charles:
And I mean these are just breeding sites for lawsuits. No holes in the driveway, you know, no uneven sidewalks that are tripping hazards or slippery sidewalks that could cause slipping hazards. You just wanna be very careful with making sure that all the walkways are 100% easy to work with. And if you are in a area where it snows and you’re having issues with like iced upstairs, you know, consider adding some sort of canopy on it. You really have to make sure that all the sidewalks and the driveways are clear and they’re safe and there’s not an issue of tripping or slipping. Number six is fire safety. So check that smoke detectors function correctly on a regular basis and possibly add a fire alarm system at the property which can save you on insurance and it place also fire extinguishers in common areas. Now depending on your municipality and the rules there, you might need for certain size buildings, you might require to have fire extinguishers there and that way you, they put up the fire extinguishers and there you have to pay somebody like every year to come out and like sign something saying that the fire extinguisher’s there and it’s fine.
Charles:
But having these things and like, you know, putting ’em in common areas and obviously putting ’em down where fires are really prone, like we were saying before in laundry areas, these are really important places where you really need to have fire extinguishers. The fire alarm system, depending on how old your property is, if it’s old 50, 60 plus years old, it might be required by your municipalities start installing these fire alarm systems at properties over a certain number of units. It was with some older properties I owned years back and we had to put ’em in one by one in the properties, but it was much easier dealing with, ’cause it didn’t have to deal with smoke detectors. It was all like one system and you didn’t have to go around changing batteries or anything like that anymore. And secondly, we saved on insurance. So it did cost money to put in.
Charles:
But the thing though is that it saves you every month on insurance or every premium increase. Just make sure you’re telling your insurance company when you make these changes or when renewals are coming and make sure you have all the documentation from fire alarm and system installation people that you can just pass along to your insurance company. Every little bit helps. Number seven is you’re gonna require renter’s insurance. So always require tenants to have landlord insurance or a renter’s insurance. And this will minimize claims against the property owner’s insurance policy. And this is not just for if there’s a storm. So a couple different problems that I’ve had before where renter’s insurance helped was that when we’d have storage areas on the property and we didn’t have ’em, like hey, this is just for this unit and it was like a locking storage unit.
Charles:
It was just like, hey, you can put your stuff down in this basement or in this extra storage place we have over here. But the thing that was that if those got damaged, then we would be held liable. So it was one of the things is that everybody moved in, you had to have renter’s insurance. We made sure that if you stored anything on the property, it is at your own risk, right? And the other thing that’s really important with renter’s insurance, which I didn’t really think about until one time years back, got sued for someone slipped that wasn’t even a tenant. Okay? Someone slipped on ice. I don’t, I don’t even know the person’s name, but they weren’t even a tenant to the insurance company. Just cut ’em a check how they usually do in these situations. But the main thing is that if this person had renter’s insurance, it would pick up, a guest would come up on their liability policy as a renter before would make it onto the landlord’s insurance.
Charles:
So these important things like this, you really want to know that you have in place ’cause the renter’s insurance can be two or $300,000. Lastly, it’s extremely important. Another reason for having renter’s insurance is that for pets. So the pets can be huge liabilities. People don’t know how to train pets. People don’t know how to handle pets. Pets bite. So the thing that was that these three things between people storing stuff, their own personal stuff on the property, people having friends over and guests and also with pets. I mean, these three things really will narrow down the amount of claims that are gonna get attached to your property. ’cause You’re gonna go after the, the renter’s insurance first, and if that’s not a big enough, they’ll come after you. But the thing though is that most situations are gonna be covered in that $200,000 or 300,000 or $150,000 that’s in that renter’s insurance policy.
Charles:
And if you have specific requirements, then what you can do is two things. You can find your own renter’s insurance company and they might give you actually a little bit of a kickback for new accounts, but you can also have what the plan needs to encompass. Okay? So you need to have 10 or $20,000 worth of personal belonging insurance and then you have this much of liability insurance to go with it, and then they’ll add you onto the policy to make sure that they just don’t get it and cancel it the next day. Right? So these are really important factors, but renter’s insurance is one of the big things and one of the easiest ways of keeping a lot of claims off your insurance. And by implementing these tips and property owners can really significantly reduce the risk. And most common insurance claims, which are the long term, will help to minimize annual insurance premium increases, along with allowing owners to price different carriers without any type of impediments.
Charles:
So I hope you enjoyed, please remember to rate reviews, subscribe to make comments on potential show topics@globalinvestorspodcast.com. If you’re interested in actively investing in real estate, please check out our courses and mentoring programs@syndicationsuperstars.com. That is syndication superstars.com. Look forward to two more episodes next week. See you then.
