What types of insurance do San Diego real estate companies need to have and be aware of?
Insurance may be right next to taxes on the list of least favorite topics for many individuals, including San Diego business owners, Realtors, and real estate investors. However, there are many new forms of insurance that come up when getting into this field. Some are mandatory, others just critical for long term success. Others can actually become significant profit centers. Make sure you’ve checked out these insurance options before you do anything else:
1. Homeowners Insurance
If you own or are buying a home, homeowners insurance is essential. If you are taking out a mortgage it will likely be mandatory. Even if you aren’t, it can help preserve and protect the captive equity in your properties. Make sure you stay on top of premiums and keep good records to avoid force placed insurance by lenders. Look for discounts for security features.
2. Wind – Storm Insurance
Unfortunately, regular homeowners insurance barely covers the basics. Additional wind-storm insurance can be mandatory in areas prone to these types of threats, and for those investing out of state in hurricane prone areas. This can add significant cost to coastal properties, but will be a great asset when storms do strike.
3. Flood Insurance
This is another of those quirky insurance coverages not included in basic homeowners or storm insurance. It is usually pretty affordable, and often mandatory – even for condos and inland property. If you are thinking about skimping on flood insurance, note that water damage resulting from storms and other disasters may not be covered without it. However, note that finding properties in pockets that aren’t on the 100 year flood map could help home buyers and real estate investors find discounts and extra spreads on properties.
4. Renters Insurance
For San Diego real estate business owners that operate rental properties or rent instead of own themselves, renters insurance shouldn’t be overlooked. In the case of owning rental properties, asking tenants to get their own coverage can help avoid lawsuits, and can help protect renters’ financial status, even if getting another form of insurance isn’t very appealing.
5. Title Insurance
Skipping title insurance is just asking for trouble. It is mandatory when taking out a mortgage loan, and just common sense even when you aren’t. Without title insurance, everything invested in a property is just begging to be lost. This insurance can also help when reselling a property. This has never been more critical than in the wake of the recent crises, and going without it can take down an entire portfolio and personal finances faster than expected. Be sure to find a reputable company that handles escrows flawlessly.
6. Umbrella Policies
Umbrella policies have drawn a lot of attention from the real estate investment community recently, especially among the buy-and-hold crowd. According to Warren Buffett, Geico umbrella insurance can pay out above and beyond. Where other policies fall short, it can provide coverage on vacant land and rental properties, and can kick in to effect in cases of false arrest, libel, slander, and malicious prosecution.
7. Business Insurance
If you own a business it only makes sense to have business insurance. This type of insurance can step in to protect office assets, and make up for business and income disruption. This can happen more often than you think, and without it many go bankrupt.
8. Key Person Insurance
Often new and small San Diego businesses rely on the functions of just a few key people. The same can be true of large companies too. What if something happens to one critical partner or team member? Key person insurance can help make up for their loss or when they are unable to perform.
9. Negative Equity Insurance
New insurances are now popping up to solve the biggest fear of home buyers and real estate investors. These insurers offer to protect the value of property during fluctuations. Obviously this can be a very smart move, depending on how they work. Beyond the personal residences of San Diego business owners this can make property for sale even more attractive, and can be a great perk for employees, or even more beneficial when companies pick up housing or relocation costs.
10. Life Insurance
Life insurance can be a smart way to ensure family is provided for if something happens to you before you hit your goals, and to relieve pressure that can cause some to be tempted to take unsustainable short cuts. In some cases, this can also work as a form of forced savings.
11. Captive Insurance
More and more U.S. business owners are setting up their own captive insurance companies. This essentially allows them to insure themselves and get into the insurance business. This provides many advantages. Check out it.
