Standard Components Of Any Insurance Policy
Our March 2024 meetup featured a presentation by Nick Lotfey, of Lotfey Dennett Insurance. LDI is a boutique, local insurance brokerage that focuses on strong relationships, both with their clients and carriers to ensure the best opportunities available for coverage. Coincidentally, about half of our Portland Women Investors group members were already LDI clients!
Nick spoke on a larger scale about the many changes we are seeing in the insurance landscape; I’m sure we have all noticed insurance companies cracking down on identified deficiencies and increased premieres. Across the board, there is about a 20-60% rate increase so it is vital to check in with your carrier well before your renewal to understand what is changing and what your options are. A downside of working with larger firms (think Geico, etc.) is that they may not be paying attention to your individual policies like a boutique brokerage would, so you’ll want to be extra diligent in your awareness.
There are a standard components that are part of any policy:
Guaranteed or Expanded Replacement Costs: TWhen possible, try and buy a policy that offers expanded or guaranteed replacement cost coverage. In the event of a large claim, if you need access to more coverage than the limit shown on the policy to repair or rebuild, there is a safety net to provide additional coverage beyond the limit shown on your policy.
Personal Contents: This will cover your personal items. For investors, this comes into play when you are storing tools in a basement, etc..
Loss of use: Think loss of rents; this is a reimbursement of rental income that you would have earned had the event not happened.
Ordinance or Law: In my own experience, having this is key. When there is damage, O/L helps to not only cover the cost to repair but also covers additional work that may be required by the town or that may need to be done to bring it up to code (without this coverage you would be required to make those changes to make it habitable at your own expense).
Lead Paint Waiver: This covers liability if lead paint is found on your property (although does not always cover the cost to repair).
Water Backup: This is an add on that allows coverage for a sewer or sump pump backup.
Additional Considerations for Investors:
Renters insurance: Because your insurance doesn't cover a tenant or their belongings, it is imperative that you require your tenants to carry their own renters insurance policy. For example, if there is a fire and the tenants are displaced, their renters insurance policy will help cover the cost for them to stay elsewhere. In my own experience, having this in place to help tenants when there is an issue has helped immensely in an already stressful situation. Policies are about $100/year for the tenant.
Nick’s best tip? Be Honest. Be up front and honest with your broker about your plans and intentions for your property. Otherwise, you may be left vulnerable with improper coverage.
Lotfey Dennett Insurance is also the first business partner for 1% Back to Maine, a nonprofit I am a founding member of and that is very close to my heart. 1% of all revenue from clients who work with a Portside Agent (and now all members of Portland Women Investors!) goes into a fund, which funds grants from local nonprofits. If you know an amazing nonprofit or want to learn more, let me know!
I have always felt that Nick & his team do a phenomenal job breaking down something that’s a little overwhelming and a little boring into something easy to understand and manageable. Knowing they are on my side and keeping an eye out for my most valuable assets has been a huge piece of mind. Having them there to walk me through an insurance claim has been invaluable. Their relationships with their carriers has also allowed them to work to find solutions to identified defects and help ensure it doesn’t have a negative impact on premiums.
If you are not a client of Lotfey Dennett already, I strongly encourage you to set up a complimentary consultation to see if they are a good fit for you.