Remodeling Contractor Insurance is a Must!
Insurance is for the big loss like a house fire, not a broken window!
For the do-it-yourself Rehabber like me, I add a rider to my Homeowner Insurance policy while under construction.
Upon completion, I convert that policy to a stand alone policy for "Full Coverage".
When you hire out the work, get a copy of the Remodeling Contractor Insurance from each contractor you hire!
Insist on a current issue of insurance from your contractor's Insurance Agent.
Not a copy from the contractor, it could be expired. They should provide Liability and Workers Compensation coverage.
Properties with a mortgage require insurance!
Properties without a mortgage, buying insurance is a choice. At the very least, do have Liability Insurance to protect yourself from personal injury claims from anyone that happens onto your property.
I have taken the risk of not having building insurance on projects when I buy a building for cash. That's a very rare occasion.
Remodeling Contractor Insurance will cover the loss of new materials and the purchase price of the building. Not the appraised value upon completion of the project
There are 2 primary ways to Reduce Risk
Insurance is protection against liability and loss of property. This is referred to as an insurance risk.
Knowledge reduces the risk of wasted profits.
Knowledge is knowing how to make profits.
Knowledge is from your own experience and from those (your Team) you hire.
I was a License Insurance Agent in my mid twenties.
The following are Tips About Insurance to save you money, and put more profits on your bottom line.
Your Team of Professionals, that I talk often about, includes having a Licensed Insurance Agent(s) on your Team!
As a Rehabber, Remodeling Contractor Insurance is just one of several insurance policies needed.
If you want great interest rates, you have to have a great Credit Score.
If you want great insurance rates, you have to be a Safe Risk.
Things That May Increase Insurance Rates:
- Low credit score – higher rates on all insurances
- A traffic ticket – higher rates on auto insurance
- Multiple traffic tickets – very high rates to uninsurable
- Claims – higher rates – to cancellation on all insurances
- Pre-existing disease – higher Health insurance rates – to uninsurable
- Pre-existing conditions – higher Life, Health, and Disability insurance – to uninsurable
- If one smokes or takes anti-depressants – higher Health, Life, Disability insurances
- If we're too old – higher insurance rates
- If we live in the wrong neighborhood – higher insurance rates
- If we engage in high risk sports or activities – higher insurance rates
It's all about risk and the insurance company is in the business to make money.
If the insured is a high risk, they're canceled.
Unfortunately some insurance is mandatory like Auto or Homeowners when there is an underlying mortgage.
Since Rehabbing is a business, Remodeling Contractor Insurance is available to protect your business interests.
A Couple of True Stories.
1.) When I was selling Life insurance, an acquaintance made me feel pretty low about my sales pitch and insisted that insurance was a waste of money.
He was qualified, never been sick before, and it was only $25 per month.
Two months later he was diagnosed with cancer. Now he wanted the insurance!
The insurance companies do Not write Life insurance for terminal patients. Sadly, he died, and left his family broke.
2.) A fellow Landlord with 9 rental houses had a broken water pipe that caused $3000 of damage.
Less his deductible he collected $2000 from the insurance company. The insurance company raised his rates on all 9 houses that cost him more than the $2000 he collected.
Now he will pay a higher premium for several years on all his properties.
For some odd reason, some folks think of insurance as some kind of a savings account - or a waste of money.
Remodeling Contractor Insurance is not a savings account nor a waste of money!
But since they have paid into it, wouldn't make sense to collect from it? Insurance is intended for major or catastrophic losses.
A loss that would wipe a family out financially, put them out of a home, or out of business.
Historically, insurance began with Farmers.
A home or barn lost from fire or severe weather, and or crops and live stock losses are devastating.
The Farmers pooled a fund together that evolved into Farm Bureau insurance.
Loss of a home, a car, and major medical expenses are the primary need for insurance.
With lawsuits; Liability insurance is now a must have.
The real need for insurance is:
"When you have something of value to loose",
It's a form of "Protection" against the big losses and not intended for small losses.
Remodeling Contractor Insurance would cover your entire project from a catastrophic loss.
The little claims, on lesser expensive items are considered Nuisance Claims.
The insurance companies charges higher rates for those who use their insurance often on small claims. Deductibles are one way to reduce those non-catastrophic claims.
I want my Remodeling Contractor Insurance most if I were to lose a home from fire.
- A total loss is a big risk.
- A broken window is not a risk!
I would never make an "Insurance Claim" on a one hundred dollar item!
One more true story about me getting sued.
I have apartments. A tenant fell on the drive way. The drive way was smooth, no ice, nothing to cause a fall.
I was in process of evicting them for non-payment.
This is without a doubt a fraud case!
They sued me and won the case of $20,000.00.
I was Furious!
My insurance company settled out of court and paid that joker $20,000.00.
His Attorney received half of the settlement.
My insurance company never even called me;
- I wanted to prove my driveway was safe,
- I wanted my day in court,
- I wanted to defend myself!
You're not going to believe this...
My insurance agent said, "Ahhh, don't worry, that's just a nuisance claim."
I said, "WHAT"!
My agent calmed me down and said that I don't have anything to worry about.
It wasn't my fault, my insurance rates won't go up, and that this happen once and awhile.
That's why you have liability insurance as part of your building insurance and part of your Remodeling Contractor Insurance!
Then she said, "The One Who Has To Worry is the joker who made the claim!"
The Claimant's insurance rates will go up for a very long time, if he can even get insurance!
He may never get a job again...
Ever notice on an application asking about lawsuit settlements?
His interest rates will be higher if he tries to get a loan again in the near future.
I do not sell insurance!
I do not like high insurance rates! Nobody does.
I do not like all the different kinds of Insurance I feel like I’m suppose to have.
Yet I'm grateful to have the insurance companies there when I need them most! For a:
- $20,000 +++ liability lawsuit
- $100,000 to $300,000 building loss
- $25,000 auto loss
- $5,000 to a Million dollar medical claim
Raise the deductibles on insurance policies to get a lower rate up to the amount where a small loss is easily affordable to pay out of pocket.
Insurance does have its place!
If we abuse it, we'll loose it.
If we're a high risk, we pay more.
As long as I have something to loose like my
- and Business,
I can't afford to be without it!
I hope this helps to show how to be a low risk, to get the lowest rates available, and how important insurance really is.
Especially remodeling contractor insurance for the Rehabber.
As with everything, shop for better rates on all services, once per year.
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