A Little Bit About Insurance

This is current as of March 1, 2015. It may vary by date and region in the US.

Do I need to get insurance?

If I have an uninsured property and have a fire causing a total loss. What happens?

What kinds of insurance are there and what do I need?

What Can You Do?

To protect against loss, you can insure your properties through several companies. Depending on your state, companies differ. They can include 21st Century, Farm Bureau, Nationwide, Progressive, Geico, Foremost and others.

Foremost, a subsidiary of Farmers Insurance, is very common, has good rates and covers most, or all, of the US.

They cover homes for 100% of what you insure them for. That means if you have $20k coverage. It’s covered for $20k. I get full coverage with $100 deductible for loss. So if a total loss, you would receive a check for $19,900.

This also includes $500k liability. So, if you have a loss that affects any neighbors’ properties, you are covered up to $500k.

There is no depreciation, wear and tear, comps needed ‘to prove value’, etc. You would get a check for the covered value minus the deductible.

We carry coverage for the value, or sales price, with a $100 deductible for damage or theft. $500k liability. I drop the coverage when someone buys for cash, and my agent calls them to write them a new policy, if they want. Or we keep the coverage on the unit, while the Tenant Buyer (TB) is making payments. To insure that the TB has renters insurance, I pay it up front and charge them monthly for the insurance.

Commercial Rental = $35/mo plus Renters = $15/mo. Total $50/mo. The Tenant Buyer pays an extra $50/mo for insurance. If they bought a home through a bank, they would pay for insurance. They need to pay with you, also. They can get their own insurance through an agent of their choosing. Since we have several properties with one agent/company, they will get a discount by going through my agent. It’s their choice, though.

If you cover a property for $10k, while repairing it, and then sell it for $20k, just call your agent and adjust the coverage.

If There is a Loss, What Happens?

NOTE: I have not had a loss or theft on a mobile home. I have not needed to make a claim. This info is according to agents I’ve spoken with, worked with and research I’ve done.

If there is a loss, an adjuster would come out to evaluate the damage. If/when approved, you receive a check.

If the TB gets their own insurance, make sure they add you as an ‘Additional Insured” and get a copy of the proof of insurance form or binder. A Binder is the proof of coverage papers from insurance companies. You got one with your car or home insurance. Verify that your name is on it as additional insured.

If there is a loss, the check comes to you, AND the TB. If you are an Additional Insured, both the TB’s name and your name are on the check. Both parties must sign. TB cannot cash it without your knowledge.

If there is a major loss and the TB receives the check, do you think they would fix the home or use the money to move? Who knows? Why risk it, keep it in your name or as an additional insured.

NOTE: While fixing up a property. If you have materials at the home for repairs, keep receipts and take pictures of the project in progress, every couple days. This serves 2 purposes. It documents your project and if there is a theft, you have proof that the materials were there.

How much does it cost?

I called an agent and was told that they won’t cover the home while I’m fixing it up i.e. rehabbing or while it’s empty.

What About The Appliances, Heater, Plumbing, etc.?

What if after 2 months, the TB calls and says the heater went out? I don’t want to pay $1500 to replace it. If they do the repair, they may say they can’t make their monthly payment.

But That’s an Added Expense

What if I don’t want to incur the added cost of insurance or home warranty?