#80 - Storm-Proofing Your Real Estate Investment with Jules Sneddon and Trevor Moss

[00:00:00] Hey everybody, Ryan Gibson from Passive Income Pilots. We're excited to announce our very first in-person meetup. So come see me and Tait at Atlanta, Georgia on Veterans Day, November 11th from 5 to 8 p.m. And we're going to be meeting at the Line Creek Brewing in Peachtree City, Georgia. Come unwind, relax, meet fellow aviators that invest and fly and also meet myself and Tait. We look forward to seeing you there. If you'd like to register, check out the link in the show notes to register for the event. The space is available to you.

[00:00:30] The space is limited, so please go in early and register. Thanks and let's get back to the show.

[00:00:36] Hey everyone, welcome back to Passive Income Pilots, another week of financial and investing education.

[00:00:42] Yeah, and if you hadn't noticed, we're going to start doing a little bit of a macroeconomic update.

[00:00:48] Yeah.

[00:00:49] And a financial update on the airline industry, just giving you a little bit of a what's going on and we're going to start trickling in those episodes in between these educational episodes.

[00:00:59] So if you're looking for education, you found it the right place. This is the right episode. If you're looking for more of an update on what's going on in the industry, we're going to have that episode drop during the week as well.

[00:01:10] Yep.

[00:01:10] So that's what you probably saw come out just recently. So with that, we're excited to educate and also continue building your team.

[00:01:18] So we have Jules and Trevor coming on from the National Real Estate Insurance Group. NREG is what I like to call them. Nice little acronym for you. But these guys are based in Kansas City. So if you're a Chiefs fan, good for you. If not, you can see the flag actually in the background of one of the guys.

[00:01:35] But no, they do a tremendous job brokering insurance across the country for rental properties and specifically real estate. So I personally have used NREG for years. When I was building my portfolio, they did a fantastic job insuring my properties. That's why when I had the chance to connect with them after seeing them at a conference, I was like, you guys got to come onto the show and we got to talk insurance.

[00:01:57] And the recent aftermath of Hurricane Lien and Milton. This is a very timely conversation. What insurance would protect you? What insurance wouldn't protect you? What types of coverages do you need just in general? And we're going to talk about how to really evaluate if you have a good insurance policy or a bad insurance policy and just tons of stories that go into it. So I'm excited to bring these two experts onto the show.

[00:02:22] I am too. Insurance has always been sort of the bane of my existence in investing. I mean, it's not a fun thing to do to read through insurance policies. I have a pro tip though. If you drop a PDF into ChatGPT and you say, give me a summary of this, it does a really great job of that. So I tried that with a couple of insurance policies yesterday and it's pretty amazing what it'll spit out.

[00:02:45] So it's tip time here a little bit. So you can buy your own ChatGPT. So it's personal to you and you can train it to know who you are. So you can ask it questions about yourself and what you need to do and what's going on. So there's a lot of, there's a lot of really cool stuff going on with AI that I've started to use personally.

[00:03:01] Yeah. And so, you know, a lot of people don't realize that you can click and drag a PDF right into it.

[00:03:05] Yep. And you'll say, hey, exactly. So like the tips you get on the show, you can maybe take some notes or you could probably copy and paste the word, the show notes and say, hey, read this insurance policy.

[00:03:15] And make sure it doesn't have these things in my policy and it'll probably tell you what's going on.

[00:03:20] Exactly. Yeah.

[00:03:21] But hey, you know, investing is a team sport. It's not something that you can do by yourself. So you need these professionals in your corner. So this is yet again, another week of bringing you an amazing firm that can be on your bench and can help you with your insurance needs.

[00:03:39] Yeah. And one last thing we said at the beginning of the show, we might've had a little blurb about, we're going to have an in-person meetup coming up. So if you want to meet with Tate and I, we're actually going to be in Atlanta, specifically Peachtree City, because no other place to meet a bunch of fellow aviators in Peachtree City.

[00:03:56] And that is going to be on Veterans Day from 5 to 8 p.m. So if you want to join us, there'll be a link in the show notes to where to RSVP. We've already got a ton of people coming. Come, relax, educate, meet with fellow aviators that are into investing and bring your questions. So with that, let's get to the show.

[00:04:20] Welcome to Passive Income Pilots, where pilots upgrade their money. This is the definitive source for personal finance and investment tactics for aviators. We interview world-renowned experts and share these lessons with the flying community. So if you're ready for practical knowledge and insights, let's roll.

[00:04:39] Welcome back to another episode. We have Jules and Trevor here from National Real Estate Insurance Group. And we're really excited to have you guys come on and talk about the wide world of insuring, mostly your rental properties and other types of commercial real estate. But Jules, we'll start with you. Why don't you just tell us a little bit about yourself?

[00:04:57] Hey guys. So I'm the executive vice president of sales and marketing here at Enric. I'm a mother of eight and a grandma of 15. And I've been in insurance in one way or another for about 32 years, as well as I'm a real estate agent, becoming a broker here pretty quick. And I have no spare time.

[00:05:22] Eight kids. That's impressive. Trevor, welcome to the show. And why don't you just give us a little background?

[00:05:28] Well, thank you. Thanks for also allowing me to follow up Jules. That's pretty tough to do. Father of two daughters. I've been in insurance here for just three and a half years, but learned an awful lot here just starting. And really passionate about making sure that our investors are well covered and that my team does everything possible to make sure that our investors are taken care of.

[00:05:50] And shown exactly what insurance they need and additionally, what other offerings that we have.

[00:05:56] Yeah. Well, we'd met each other for many times at the Anderson conference. And I have personally used a national real estate insurance group in the past when you guys helped us insure a lot of our self-storage facilities. But one thing that's on everybody's mind right now is Hurricane Helene and Hurricane Milton that just screamed through Florida. And I'm sure you guys have been inundated with questions and concerns and things like that in the last, over the last couple of weeks.

[00:06:23] If you don't mind, just kind of unpack what insurance is working there, what insurance isn't working there, what do investors wish they would have done, and kind of what are you guys seeing? Talk about the tough current stuff first.

[00:06:36] As far as insuring in these areas where hurricanes are very prevalent. Everyone talks about needing name storm insurance, hurricane coverage, right? Which is very, very important. We talk with all of our clients in these areas and make sure that they understand the benefits of having that type of coverage, but also the risk of not carrying that coverage and what they could run into if they don't have that proper name storm insurance.

[00:07:04] But a lesser known coverage that people are probably aware of, but don't think of how claims are determined in these areas with storm surge. You actually need flood coverage. And it's huge. If you don't have flood coverage, any of the damage that's done by storm surge itself is not going to be covered.

[00:07:23] And so when we talk with our clients, we make sure that they understand the impact of having name storm coverage, but having flood is almost, if not more important because of the damage that the storm surges provide.

[00:07:37] And what other types of insurance would protect? Because obviously wind is a big portion of that, right? Is there actually wind insurance coverage?

[00:07:44] Yeah. And with our program in particular, we bundle that with either, you can choose to have that coverage with name storm included coverage or name storm excluded coverage.

[00:07:57] So we make it super easy for our investors to know, hey, if you're going to have coverage, do you want that name storm to be covered or do you not?

[00:08:05] And really that's, it's up to each individual investor, but it's most important to understand exactly how they want the insurance to respond in the event of a loss.

[00:08:15] And then we can take it from there.

[00:08:16] How have these storms changed the industry?

[00:08:19] It seems like Florida is getting hit harder and harder as the years go on.

[00:08:24] You know, it's due to climate change, whatever.

[00:08:27] There's stories about insurers pulling out of states altogether.

[00:08:30] How have these two back-to-back one-two punches changed the industry this year?

[00:08:35] Yeah. Well, their effects for this year really, you know, they haven't been felt yet.

[00:08:41] On these storms, that's going to be, you know, in the coming years that we're going to see the, you know, the impact from that.

[00:08:48] What we're seeing now is from years prior with, you know, the large storms that we've had before now really kicking in.

[00:08:55] There's a big misconception that insurance companies just have their pockets full of cash.

[00:09:00] But when you see a lot of events like these that have happened, you see the destruction in North Carolina.

[00:09:06] You see what's happened now in Florida.

[00:09:08] You see the wildfires out west.

[00:09:10] You see earthquakes.

[00:09:11] All of these things, the tornadoes and hail here through the Midwest with us.

[00:09:15] You see all of those things.

[00:09:17] And, you know, you think about, I give, you know, $2,000 a year in insurance premium.

[00:09:23] Well, you know, your $2,000, my $2,000, we put all that together.

[00:09:26] Yeah, that's a good chunk of change.

[00:09:28] But so is the amount that they're having to pay out to cover these losses on these properties, you know, that are affected by these big hurricanes, these catastrophic events.

[00:09:38] If you take a step back, you can see why the industry has changed.

[00:09:42] And along with, you know, inflation kind of creeping in there as well.

[00:09:46] Labor has gone up.

[00:09:47] Materials have gone up.

[00:09:48] And so here we are.

[00:09:50] We're, you know, looking at a – it's a tough market right now.

[00:09:53] Still is.

[00:09:53] It has been for a couple of years now.

[00:09:55] And what happens if an insurance company runs out of money?

[00:09:58] Has that ever happened before?

[00:10:00] And obviously that's why they're pulling out of certain states or certain policy coverages, right, because they're protecting themselves from that.

[00:10:08] Is that ever an eventuality?

[00:10:11] Yeah.

[00:10:11] I mean, there's plenty of interest companies, carriers that have gone and solved it in the past.

[00:10:16] But we don't ever pair ourselves with any companies that have that risk associated with them.

[00:10:22] You know, you have some fly-by-night companies that come in and offer lower coverage, you know, flashing lights, low coverage.

[00:10:30] Not a lot of it, underwriting.

[00:10:32] And then they take your business.

[00:10:34] And then before you know it, they're insolvent.

[00:10:37] They can't pay their losses.

[00:10:38] And they're gone.

[00:10:40] And you're just left hanging.

[00:10:42] That's why it's important when you're choosing an insurance carrier.

[00:10:45] Don't just look at the price.

[00:10:47] That's not what you need to look at.

[00:10:49] You need to choose them on the merits of the coverage that they're going to give you and how long have they been around.

[00:10:53] What carriers are they pairing with?

[00:10:55] Is this a legitimate company?

[00:10:57] I can, you know, lay my head down at night and know I'm going to be covered if something happens?

[00:11:02] Or are you going to lay awake at night wondering, that coverage is cheap.

[00:11:06] I'm saving $1,000 on this annual policy.

[00:11:09] But is it going to cover me?

[00:11:10] I don't know.

[00:11:12] So, Trevor, explain how I would vet and know that I'm in partnership with a good insurance carrier.

[00:11:19] Is there kind of like a rating scale or some kind of due diligence I can do on my own to make sure that who I'm actually partnering with is legitimate?

[00:11:26] Yeah.

[00:11:27] Yeah.

[00:11:27] So, there's a rating.

[00:11:29] It's called A&M Best.

[00:11:31] And it's going to give all carriers and insurance companies a rating.

[00:11:35] So, you want to typically deal with insurance companies that are A-rated or better.

[00:11:40] And that's going to let you know that I'm dealing with really quality insurers that are not going to go unsolvent and are going to be able to cover you in the event of a loss.

[00:11:49] At the end of the day, you want to make sure that you have paired with a strong carrier with a reputable past.

[00:11:55] And that A&M Best rating is one of the best ways to look at that and find out.

[00:12:01] And so, if I'm a passive investor, let's say, and I'm investing in somebody's syndication or somebody's deal, I would want to ask the operator potentially, you know, hey, what type of insurance do you have on the property?

[00:12:12] What types of good responses would you want to hear from that operator to be insured that you're insured correctly on the deal and that your money's being protected well from a good insurance company?

[00:12:26] Or just what policies would I come to expect?

[00:12:28] Yeah.

[00:12:29] Well, and you're going to want to make sure that your investment is going to be protected, right?

[00:12:33] A lot of the times here with us, that's getting to know our clients and getting to know their investment strategies.

[00:12:40] We have some clients that want to be insured to the nines, right?

[00:12:44] They want to be fully protected.

[00:12:45] And so, we can take care of them in that sense.

[00:12:48] We're going to make sure you have replacement cost coverage up to the replacement cost amount that we have.

[00:12:53] So, we know in the event of a loss, a total loss, you can rebuild that property.

[00:12:58] You're going to want to make sure that you have a special form coverage, which is a more comprehensive coverage to cover for all of those things that aren't excluded in the policy, right?

[00:13:09] It's called a named exclusion policy.

[00:13:12] They have to name what they're not going to include in coverage.

[00:13:15] And so, it's just a much more comprehensive coverage.

[00:13:19] For example, what, Trevor?

[00:13:21] What would be an example of what would not be covered?

[00:13:23] So, mold, if mold's a typical one, wear and tear is another one.

[00:13:29] We find that in the special form coverages, you're going to want that water damage coverage that happens.

[00:13:35] You're going to want the theft coverage, which is important to have.

[00:13:39] And so, it's getting to know our investors and figuring out exactly how they want to be insured.

[00:13:43] And, you know, by those conversations that we have, you can also know, hey, this is a more savvy investor.

[00:13:50] They still could be doing it passively, but they've got connections to a contractor that can get the job done for pennies on the dollar.

[00:13:58] You're able to then talk with them about how much they want to insure their properties for.

[00:14:03] And maybe they're not having to pay for as much insurance up front because they can save money on the back end.

[00:14:08] We talked about all the things that you'd be looking for in an insurance policy.

[00:14:12] If I'm a passive investor, I'd be investing in a project.

[00:14:15] I'd want to ask the operator and understand what insurance policy that you have.

[00:14:19] And, you know, Trevor really covered it well.

[00:14:21] But what are some, like, absolute non-starter red flags that if you got the policy, doesn't matter how good you are, how many contractors you have,

[00:14:29] like, what are some red flags that would be in an insurance policy that would make you walk away from a deal?

[00:14:35] The first red flag for me would be anything that has to do with coinsurance on a property and casualty insurance policy.

[00:14:43] Or even I've seen them on a couple of builders' risks as well, which is crazy.

[00:14:48] So a coinsurance is a penalty when it comes to property and casualty, where we always think of it as like our health insurance, right?

[00:14:56] You know, if I have a coinsurance of 10 or 20%, that means that's all I'm responsible for.

[00:15:01] But with property and casualty, anytime we see a coinsurance penalty on there, a lot of the time we don't realize as investors that it's actually a penalty, number one.

[00:15:13] Number two, we don't even understand what in the heck it means.

[00:15:15] And so what it means is that you have to have that property insured for what it would cost to replace the building, okay?

[00:15:25] So let's say that if you bought it for $400,000, but the land is worth $140,000 of that $400,000, then you would need that building to be insured for, you know, $260,000.

[00:15:38] But if you only had it insured for what the mortgage is on it, let's say the mortgage was only $150,000, then you would be underinsured by 40%, which means if you had a $100,000 loss, the first thing that's going to occur is the insurance company is going to deduct $40,000 off of that $100,000 loss before depreciation, before your deductible.

[00:16:01] So it is a penalty for being underinsured.

[00:16:04] And so that would be something that would be a no-go for me at our company, National Real Estate Insurance Group.

[00:16:11] We don't even allow carriers as part of our program that do coinsurance for that very reason, because most investors, most insureds don't read their policies and they don't understand how that works.

[00:16:23] So we were talking together before the show about coinsurance, and this is really interesting.

[00:16:28] This isn't something I was aware of.

[00:16:30] What does that read like in the policy?

[00:16:32] When you read through and you look at a policy document, if you just go Command F and search coinsurance, does it come up or is it called something else?

[00:16:42] Nope.

[00:16:43] Should come up.

[00:16:43] Right, Trevor?

[00:16:44] Okay.

[00:16:45] Yeah.

[00:16:45] Co-insurance.

[00:16:47] Yeah.

[00:16:47] And it's going to read like a lot of policies will say 80%.

[00:16:51] You have to be insured to 80% of the replacement costs.

[00:16:55] Some will say 90%, some say 100%.

[00:16:57] And so if you're not insured up to at least 80% of that insured amount, if that's what that policy states, you are going to suffer a penalty for the percentage that you are insured below that threshold.

[00:17:09] And that's taken right off the top.

[00:17:11] There's no ifs, ands, or buts.

[00:17:12] It's taken right off the top.

[00:17:14] You're out that money no matter what.

[00:17:15] And then you go from there and then the rest of the plan is settled.

[00:17:19] Understood.

[00:17:20] And I actually have an example that I can send you guys, and I have an explanation that you can send to your listeners.

[00:17:26] We'll link to it in the show notes.

[00:17:28] Yep.

[00:17:29] Yep, absolutely.

[00:17:30] Fantastic.

[00:17:30] And then that way they can read it.

[00:17:32] And this is something that I've gone all over the country and educated folks on because, and it's actually what I spoke about when we met at Anderson Advisors, because it's something that we are seeing where these fly by the seat of their pants.

[00:17:45] You know, new companies are coming out and they're saying, hey, no inspections, no underwriting.

[00:17:50] You know, but then when you look at this policy that's, you know, cheap, I always say how expensive is cheap?

[00:17:56] Because if it was $1,200, but it cost me $40,000 for this loss, how expensive did that cheap policy end up being?

[00:18:04] Yeah.

[00:18:05] So what I'm hearing is make sure that any investment you're making into somebody's property or syndication, if you're doing that, make sure you're getting it from an A-rated carrier, no coinsurance policy, and make sure that the policy, the coverages are right sized to where it's located in the United States.

[00:18:22] You guys mentioned that you put together these policies and you select the carriers.

[00:18:27] We should probably take a step back and just explain what does NRAG do or National Real Estate Insurance Group.

[00:18:33] You guys are basically, you can go and you're kind of a one-stop shop for aggregating these policies, right?

[00:18:40] So you kind of go out and shop it around kind of as a broker.

[00:18:44] Is that right or something different?

[00:18:46] Yeah, that's 100% correct.

[00:18:48] We are a broker.

[00:18:49] We represent about 15 different carrier partners.

[00:18:52] We are a monthly reporting insurance company, which essentially just means that you pay as you go with us.

[00:18:59] And it's really a different take on insurance that we found is very beneficial to our investors because let's say you purchase a property and you need to renovate it, right?

[00:19:10] You're flipping it or it needs a little touch up before you bring in a tenant.

[00:19:15] We can insure you as a building or a builder's risk policy so you can get in there, get those renovations done.

[00:19:21] As soon as those are complete, you can give us a call, shoot us an email, go on your client portal and say, hey, this is done.

[00:19:28] I'm going to have a tenant movie in the end of the week.

[00:19:30] We'll switch it over to occupied.

[00:19:32] It's a piece of cake.

[00:19:33] Our job is to make the investor's job as easy as possible when it comes to insurance.

[00:19:38] We do a great job of learning exactly how you want to be insured.

[00:19:42] And then we match you up with policies that will complement that.

[00:19:46] And then as far as one thing I didn't mention on the coverages that you should definitely be looking for, you also want a significant amount of liability coverage as well.

[00:19:56] Generally, in the industry, you see $300,000, $500,000 for liability for the year.

[00:20:02] And that's, in our opinion, not enough.

[00:20:05] So our standard liability policy is going to be $1 million per occurrence with $2 million aggregate for the policy year, which is going to provide you with more than enough, we feel, in most cases, liability coverage for that annual policy, which is going to lessen the need for that umbrella policy that you might have to pay out of pocket for.

[00:20:24] That was my follow-up question to that.

[00:20:26] Do you provide umbrella policies for folks?

[00:20:28] And if they already have one, how does that affect the liability coverage?

[00:20:32] So it really depends.

[00:20:34] We have a commercial partner.

[00:20:35] So in our program directly, we don't write umbrella policies.

[00:20:39] We do have an in-house commercial partner that we can refer you to that will take care of your umbrella policies as needed.

[00:20:45] But by giving that $1 million, $2 million per location per unit, that's not always necessary.

[00:20:52] Can I give an example for you on that?

[00:20:54] Please.

[00:20:55] Okay.

[00:20:56] So I had a gentleman come up to me and he said, well, I have 10 properties.

[00:20:59] They have $500,000 each in liability.

[00:21:02] And I have a $3 million umbrella policy.

[00:21:06] And I said, okay, so are each of those properties owned under a separate LLC?

[00:21:11] And he said, yes.

[00:21:13] And I said, well, that is not how we would insure you because you're opening yourself up to risk by having all of your properties under one umbrella.

[00:21:21] Because now you're letting those attorneys that are coming know exactly what you own.

[00:21:26] And isn't the point of owning all of those separate LLCs to protect you from anyone knowing your other property.

[00:21:32] So instead, what we would do is we would have you have $1 million, $2 million aggregate.

[00:21:38] And what it ended up coming out to be is $10 million per occurrence, $20 million aggregate for $1,200.

[00:21:45] So he was getting five, six times the amount of coverage for $300 less a year.

[00:21:52] And so, and then in my opinion, what I do on my policies is the umbrella policy that I have is on me.

[00:21:59] Okay.

[00:21:59] Because if once they get through all of your, you know, other beverages, you know, they're going to come out to you personally.

[00:22:07] Right.

[00:22:08] Possibly.

[00:22:09] Or you can get an umbrella policy on that LLC if that's what you're really concerned with.

[00:22:14] But what I always say and what Trevor and I went around and we've been talking to folks about is that if you have that LLC,

[00:22:21] you don't want to have yourself as the named insured on that LLC policy.

[00:22:27] You want to make sure that whoever or whatever entity is on that deed is what is listed as the named insured.

[00:22:34] Because otherwise you're opening yourself up to something called piercing the corporate veil.

[00:22:39] And that's where an attorney will come in and they'll go, well, if this is a separate entity from you, then why are you the named insured?

[00:22:46] It's one thing if the LLC is the named insured and you're an additional insured.

[00:22:51] Okay.

[00:22:51] But we do those kinds of things.

[00:22:53] That's an additional thing that we do.

[00:22:54] And that's to protect you as our investor and to advise you properly.

[00:22:58] We're not just agents.

[00:23:04] And that we're looking out for that risk appetite that you have.

[00:23:07] It's so refreshing to hear because I was talking to Ryan before the show as well about how, for me, insurance on my own personal rental properties is one of the largest headaches of life.

[00:23:17] And reading through an 80 or 100 page insurance policy on a multifamily, small multifamily building is not the way I would want to spend an afternoon.

[00:23:28] I don't understand it very well.

[00:23:30] And I think that this is, it's so nice to first of all have this conversation, but it also rings so true with what we say about CPAs.

[00:23:37] We sit here and educate on tax topics all the time.

[00:23:41] But the idea isn't to go become your own tax person.

[00:23:44] It's to have an intelligent conversation with your CPA and with a CPA who knows what they're doing.

[00:23:50] So I'll certainly be reaching out to you after this to look at my insurance policies and try and get that straightened out.

[00:23:57] And I encourage all the listeners to as well.

[00:24:00] Yeah.

[00:24:00] When I own rental properties, you guys insured them, but I sold all my rental properties.

[00:24:04] So I no longer have no insurance on them.

[00:24:07] We appreciate that.

[00:24:08] Well, and one of the other things that we'll do for them, for your clients is for your listeners is we will run a policy for them.

[00:24:16] Cause you know, that debt to income ratio is highly affected when you go to buy a home, right?

[00:24:21] When, or property could be a multifamily or whatever based on the insurance.

[00:24:25] And so a lot of the time you guys end up being an escrow before you end up finding out what the insurance is going to cost.

[00:24:31] And we don't want that.

[00:24:32] So as one of our investors, we're going to run those numbers for you ahead of time and at least give you a solid idea of what you're looking at, you know, as part of just who we are as a program.

[00:24:42] We want to make sure that we're looking out for our investors and, and making your lives as easy as possible.

[00:24:47] We have a portal, you know, that makes it easy for you as well.

[00:24:50] I get to talk to all the kinds of folks all the time and they're like, oh, I just wish my insurance would answer their phone.

[00:24:56] Well, I've got, you know, 40 plus people on a daily basis that are answering their phones.

[00:25:01] And those are all the things that scare you when you're an insured and wondering, is my insurance company insolvent?

[00:25:07] Are they solid?

[00:25:08] Like what's going on here, right?

[00:25:09] Yeah.

[00:25:10] I, I want to stress that.

[00:25:11] So whenever we put a property under contract to purchase, we already have an, we have an insurance quote, like a week under contract.

[00:25:18] And so you, you, you know, when you, if you're buying a rental property and you're trying to pencil your pro forma, your projections for that deal, call national real estate insurance group.

[00:25:26] And they're going to give you a quote for what the insurance will actually be.

[00:25:30] And you can get a quote from an A rated carrier with all the correct policies and understand exactly what your monthly costs are before you actually settle on the property.

[00:25:38] The time to shop for your insurance is not outside of your due diligence period, because here's why, you know, the, the last seller, you know, and this applies to commercial and residential.

[00:25:47] And I will say this happens in commercial all the time.

[00:25:50] The last seller may have had a policy for decades with the same carrier, the same local mom and pop, whatever.

[00:25:58] And he may have been, or she may have been way underinsured or had some special sweetheart deal, whatever it is.

[00:26:05] But guess what?

[00:26:06] When you go catch your policy and all the things that you need to ensure your property correctly, it's going to be a different quote.

[00:26:13] And so that could make or break your deal.

[00:26:16] And so just don't assume that the last insurance policy is going to carry over to your new deal and ask me how I know.

[00:26:23] Right.

[00:26:23] When we do, we learn to write thousands and thousands of deals over the years.

[00:26:27] And let me tell you, I know exactly what my insurance costs are going to be going into every deal.

[00:26:32] You know, and it's very rare now that we get kind of surprised.

[00:26:36] You know, sometimes it might be a little bit lower at the end, sometimes a little bit higher.

[00:26:39] But when you have a good broker to call, a good advisor to work through these challenges, you're going to know what you're going to pay before you actually close.

[00:26:47] And maybe the insurance could make or break your deal.

[00:26:50] So if you're under contract and you're able to wiggle out of a deal because the insurance costs are way higher than you anticipated,

[00:26:56] if you're having these conversations and you have folks like Jules and Trevor in your back pocket,

[00:27:01] you can call them and all of a sudden you're realizing, holy cow, I can't buy this deal because I can't even get it insured right.

[00:27:06] Or the insurance costs are astronomical and I can't do the deal itself.

[00:27:10] Right.

[00:27:11] So what you just said there, I think, just resonates so well with, you know, getting a quote before you actually close.

[00:27:16] Yep.

[00:27:17] So important.

[00:27:18] And I assume that you found that out the hard way, sir.

[00:27:21] Yeah.

[00:27:21] A couple times.

[00:27:22] It's the best way to learn.

[00:27:23] A couple times.

[00:27:24] Yeah.

[00:27:24] You know, let's talk about Florida some more because I do think that investors are curious about that.

[00:27:31] I mean, I own assets in Florida and there is a lot going on.

[00:27:34] And there, you know, what, what is it though?

[00:27:36] How do you weigh the risks and the rewards with getting an insurance policy?

[00:27:41] Because obviously Trevor, at the beginning of the show, you talked about, you know,

[00:27:44] you got to have coverage against the storm surge, which is flood insurance effectively.

[00:27:48] And you also need potentially wind protection in the insurance policy as well.

[00:27:55] But like what Jules, what's the, what's the balance there on how much you should spend versus what you get

[00:28:00] and kind of that evaluation criteria.

[00:28:02] So when I'm looking at it for myself, I have a low appetite for risk when it comes to my properties.

[00:28:10] I am going to insure them for the not to the nines.

[00:28:14] Now, do I have properties where I have a higher appetite for risk that I, you know, one of the things

[00:28:21] that we were talking about earlier is how can I get my insurance policy to be lower?

[00:28:25] Or, you know, look, the cost to be lower, right?

[00:28:27] The premium.

[00:28:27] And I was telling you that that would mean that you are going to raise your deductible, right?

[00:28:33] And thereby lower your premium.

[00:28:35] And so if we do that, if we raise our deductible, lower our premium, and then we take whatever it is

[00:28:40] that we would have spent, right?

[00:28:42] And we put that, we sock that away.

[00:28:44] That's one way of almost like self-insuring.

[00:28:47] But at the same time, getting that lower premium because you might not ever need that money.

[00:28:51] And so when it comes to places like Florida, you know, named coverage, you know, named losses,

[00:28:58] the reason that pertains and all these other things are named is because that's how insurance

[00:29:02] companies decided that's going to be covered a lot of the time, you know, is if it's a,

[00:29:06] if it's a named storm, you know?

[00:29:09] And so I know Tara was referring to that earlier.

[00:29:11] Well, you know, when I first started in the insurance industry, I was like, what in the

[00:29:15] heck does that mean, named storm?

[00:29:18] Well, because there's lots of non-named storms and, you know, some of those may not be covered.

[00:29:23] So for me, I would have flood if, but you have to look at, you know, if I have flood in a lot

[00:29:28] of places, you know, folks use the state version, right?

[00:29:33] Of that flood insurance.

[00:29:34] Well, you got to ask yourself right now.

[00:29:36] I'm asking myself, is Florida solvent to pay for all those folks that they had on their

[00:29:42] fair plan or whatever it's called in that state?

[00:29:46] You know, that's kind of scary.

[00:29:48] There are outside insurance companies that, and I'll give you an example in Nashville,

[00:29:54] there was a gal that came to me and she had a quote from their state fair plan for $6,000

[00:30:00] for flood insurance.

[00:30:01] And we were able to insure them for $1,900.

[00:30:03] So we saved them almost two thirds based on one of our policies that is not a fair plan

[00:30:10] policy.

[00:30:11] And so, you know, that to me is something if I had properties in Florida, which I don't,

[00:30:17] but I'm going to, I'm actually going, we're going to be going out to Florida here in December

[00:30:21] as a family.

[00:30:22] And we're looking in Miami and, and Boca Raton and that kind of area.

[00:30:29] And I'm going to want to make sure that I have the right insurance.

[00:30:32] But also I want to point this out to you.

[00:30:34] When you're paying, when you're deciding what you're going to charge for your rent, don't

[00:30:39] you include your taxes and your insurance as part of that, what you're figuring in?

[00:30:45] So really as an investor, if we remember, we're not the end user, right?

[00:30:50] Our end user is our renter.

[00:30:52] Right.

[00:30:53] In most cases, did you ever think about that?

[00:30:56] Yeah.

[00:30:57] Well, yeah, it's definitely passed, passed upon.

[00:30:59] You know, I think the, the challenge becomes as an operator, when you buy the investment,

[00:31:06] you assume a certain insurance cost, that insurance cost goes up, you know, exponentially.

[00:31:13] Exponentially.

[00:31:14] And, you know, you nailed it.

[00:31:15] I mean, I think taxes and insurance, those are the two things that are really outside

[00:31:19] of your control that drive a lot of expense, which will hurt your NOI and hurt your valuation.

[00:31:25] And so when you have an insurance going up or even a loss of coverage for some reason,

[00:31:31] you know, that is a risk.

[00:31:32] And I feel like that's where, yeah, the rents might go up.

[00:31:36] But if someone else has a lower cost of insurance or maybe they're a little underinsured, you

[00:31:41] know, they can be more competitive in rates and rates can only go up so much necessarily.

[00:31:46] So that poses, I think, a bit of a threat.

[00:31:48] But you're absolutely right.

[00:31:49] I mean, pass it along to the consumer.

[00:31:51] And, and I think that's, you know, part of the, part of the cost of doing business.

[00:31:56] So.

[00:31:56] But are you aware of why the insurance rates went up and toward it?

[00:32:00] Do you, do you understand what the actual reason was?

[00:32:03] No.

[00:32:03] So this might help you.

[00:32:05] So there were some contractors out there a couple of years ago and they were going to

[00:32:11] homeowners and they were telling these homeowners, Hey, if you want your roof replaced, then just

[00:32:16] go ahead and assign over your benefit to us and we're going to get your roofs replaced for you.

[00:32:22] And so by assigning over their benefits, the homeowners were getting their roofs replaced

[00:32:26] before the policy, before the claim was even completed.

[00:32:30] And then if the contractor couldn't get it taken care of, they would then go with these

[00:32:34] attorneys.

[00:32:35] And so between these attorneys and these contractors and these assigned benefits, they took the

[00:32:40] insurance companies out there for, I think it was like 248, was it billion, Trevor?

[00:32:46] It was like $248 billion, right?

[00:32:48] He's probably still present.

[00:32:50] Yeah.

[00:32:50] And so what happened is the state of Florida actually had to go to legislature and they

[00:32:55] had to actually make that not something that, that homeowners can do now.

[00:32:59] And so because of that, because hello, even if you're a nonprofit, you still have to be

[00:33:04] profitable, right?

[00:33:06] Nonprofit means that we just don't pay tax.

[00:33:08] Okay.

[00:33:08] So all businesses have to be able to be profitable or they're not going to stand as

[00:33:12] business.

[00:33:13] And so what happened is all of those folks that, you know, took that, that were granted

[00:33:18] now, unfortunately, the end user is the one that's getting the short end of the stick

[00:33:24] on that, right?

[00:33:26] So all those folks that owned in Florida and didn't take advantage of the system and didn't,

[00:33:30] you know, assign over their benefits, they're now the ones that are actually paying for it.

[00:33:34] And so I'm not saying that that's fair or that's right, but I just want you to know,

[00:33:37] you can look that up just like you can look up Hurricane Helene, you know, from September

[00:33:42] 26, 1958.

[00:33:43] It's always interesting when we really dig in and see what the real, you know, the real

[00:33:48] reason is.

[00:33:48] Also, can I point out to you, are you aware that your insurance commissioner is the one

[00:33:53] that determines what your insurance goes up by?

[00:33:56] So, so when homeowners and investors are wondering who determines that, you know, that's what your

[00:34:03] insurance commissioner's job is.

[00:34:04] They're the ones that determine if they're going to allow insurance companies to raise

[00:34:08] your rate.

[00:34:09] And so that's a whole other, you know, possibility as well is maybe we need to go to our insurance

[00:34:15] commissioners and, and say, Hey, we need you to be, you know, taking us into consideration

[00:34:20] when you're making these determining factors, you know?

[00:34:23] And is that, that's done by state?

[00:34:24] Yep.

[00:34:25] Interesting.

[00:34:25] Interesting.

[00:34:26] Before we move on, I want to go back to something you said, because I, I really want to stop on

[00:34:32] this, uh, the fact that, that you can choose a higher deductible for a lower cost of insurance.

[00:34:39] So I think that's really important for investors, homeowners to think about that of, you know,

[00:34:46] Hey, can I, what kind of hit can I afford to take?

[00:34:49] And look at that ratio of how much is it going to cost me per year?

[00:34:53] What is my deductible?

[00:34:54] Uh, and something you said that really resonated with me is, Hey, if you can take the higher

[00:35:00] hit, let's say instead of having a 5,000 deductible, uh, you have a $50,000 deductible

[00:35:04] and it, but it reduces your insurance rates by let's say five, $10,000 a year.

[00:35:10] Well, you can take that money and invest it and keep it aside so that if you do have to

[00:35:16] use it and you, you're going to have to be out of pocket by 50,000 instead of 5,000, uh,

[00:35:21] that you have that set aside, but at least it's in your pocket growing and not in the

[00:35:25] insurance company's pocket.

[00:35:26] I thought that was really interesting.

[00:35:27] So I just wanted to circle back on that before we move on.

[00:35:30] Yep.

[00:35:30] That's exactly what we do as a family.

[00:35:33] You know, my kids, even when it came to health insurance, one of the things that I taught

[00:35:36] them is if you're young and healthy, set that money aside and let's see, do you really

[00:35:40] need to pay that to the insurance company or is that money that you could be investing

[00:35:44] and putting aside?

[00:35:45] Trevor, why don't you tell them what it is that we say to investors about what the amount

[00:35:50] is when they should know what to use for their deductible?

[00:35:53] What that question is that we ask them.

[00:35:55] And we just ask, you know, what size of claim would they turn in?

[00:35:59] So, you know, I just ask them point blank.

[00:36:01] Hey, um, if there was a $5,000 loss, would you consider turning that in?

[00:36:07] Is that going to really harm your business?

[00:36:09] Where does that fall on your scale?

[00:36:10] And, you know, we, and we get the range, you know, some people say, ah, yeah, that's

[00:36:16] going to hurt me.

[00:36:16] I've got to, I've got to have a lower, uh, lower deductible.

[00:36:20] Um, you know, that's fine.

[00:36:21] That's why our $2,500 deductible option is there, but your more savvy investors, the

[00:36:26] ones that are more tenured, they're going to say, no, let's go ahead and let's bump that

[00:36:29] to 10 K.

[00:36:30] And every now and then we'll get some that even want a 25 K deductible.

[00:36:34] But yeah, it's just all about, um, you know, your appetite for risk kind of hedging your

[00:36:37] bets a little bit and, and knowing how much loss is going to be detrimental to your

[00:36:42] business and then insuring to that.

[00:36:45] If I get in a car crash and my car costs $20,000 to fix, my insurance rates go up.

[00:36:52] If I get a speeding ticket, my insurance rates go up.

[00:36:54] How does it work with rental properties?

[00:36:56] If I get flooded or there's wind damage on my roof, do my insurance rates go up automatically?

[00:37:03] With us?

[00:37:04] No, that's not the case.

[00:37:05] We are going to look at your entire book and determine several things, you know, as far

[00:37:12] as how many previous losses that we had, what did those losses amount to be?

[00:37:16] Just because you've had three losses doesn't mean we're just going to cut you loose and

[00:37:19] say, see you later.

[00:37:20] That's not how it works.

[00:37:21] And our company is a little less like the traditional insurance companies that are going to look

[00:37:26] at your previous history and then assign your rate based on that.

[00:37:31] We have our carriers, if you're still willing, you know, someone that can be insured by our

[00:37:35] program, we're going to insure you at the same rate that a new investor is coming through

[00:37:39] for the first time.

[00:37:41] And so we don't hold those previous losses against you in that fashion.

[00:37:45] Makes sense.

[00:37:46] That's great to know.

[00:37:46] What are some of the new and exciting things coming down the pike in the real estate industry?

[00:37:53] Is there any sort of technology or what are you guys looking forward to in the industry

[00:37:59] coming ahead?

[00:38:00] There's several things that are coming through and I think Jules probably can touch on them

[00:38:04] a bit more.

[00:38:05] But there are some companies that are thinking outside the box a little bit and that's going

[00:38:10] to require some special insurance initiatives to make sure that they're covered correctly.

[00:38:15] And, you know, although Jules take that one away, she's been kind of the founder of that

[00:38:20] one on our end.

[00:38:21] So we're seeing a lot of Airbnbs, obviously, and a lot of insurance companies didn't have

[00:38:27] the foresight to insure those kind of properties.

[00:38:30] We also have pad split.

[00:38:31] I don't know if you've ever heard of pad split, but a lot of Gen Z and millennials really

[00:38:36] like it.

[00:38:37] It's where you take a home that was maybe four bedrooms and you get rid of the living room,

[00:38:42] you get rid of the dining room and they turn them into bedrooms for you.

[00:38:44] And then they end up 2xing your amount that you can make monthly by doing that.

[00:38:51] Well, that's kind of harder.

[00:38:52] You know, a lot of the insurance companies don't have an appetite for risk with that

[00:38:56] kind of thing.

[00:38:57] And so for us, we want to figure out what's the best way that we can insure those properties

[00:39:02] and also protect our homeowners.

[00:39:05] Because one of the things that we like to do is we have a policy, one of our things that

[00:39:09] we have, it's an ancillary product that's called TPP.

[00:39:12] So it's kind of protection plan.

[00:39:14] What that does is that allows for the homeowner to be protected from any kind of damage that's

[00:39:21] caused by the tenant, like in 60,000 or 100,000 increment.

[00:39:26] It also gives the tenant righteous insurance that covers their content.

[00:39:32] And it doesn't go against then your regular landlord policy and that only has a $500 deductible.

[00:39:39] So those are the kinds of things where we're trying to think outside of the box to protect

[00:39:42] you as the investor and not go against and not have your insurance rates fill up.

[00:39:49] And then one other thing that we're seeing more and more is arbitrage where folks are leasing

[00:39:56] and then sub-leasing.

[00:39:57] And a lot of insurance companies are terrified of that, which they really shouldn't be, but they are.

[00:40:04] So speaking of Airbnb, we talk about the short-term rental loophole, tax loophole strategy on this show a lot.

[00:40:10] What are some specific considerations or implications for short-term rentals that you would call investors' attention to?

[00:40:19] I would just make sure that your policy is set up for that.

[00:40:21] You want to make sure that your insurance company, you're not insured by us.

[00:40:26] Well, anytime you're insured, you need to make sure that they are aware it's a vacation rental,

[00:40:31] it's a short-term rental investment property, so that they can confirm that it's on a carrier

[00:40:35] that is welcoming of that type of business.

[00:40:38] If you're not insured correctly, any type of loss can be turned down from the jump by the carrier

[00:40:44] because you misrepresented the property and what kind of business you're conducting there.

[00:40:51] Well, so in other words, what he's saying is having a homeowner's policy that has an endorsement

[00:40:55] that allows asional Airbnbs is not going to work if they go and talk to your neighbors

[00:41:01] and they find out that you are doing it daily.

[00:41:03] You're going to get that claim denied.

[00:41:05] Right.

[00:41:05] So that's exactly, specifically, you don't want to have a homeowner's policy with that

[00:41:10] little bit of extra on there.

[00:41:12] You want an actual landlord, a properly endorsed landlord policy for short-term rental.

[00:41:18] Gold.

[00:41:19] Yeah, and you want to make sure that your contents are being covered as well.

[00:41:22] You also want to make sure you have loss of rents coverage.

[00:41:25] Contents, you're furnishing the thing, right?

[00:41:27] You'd be out a lot if you didn't have contents coverage and a fire came through.

[00:41:30] So make sure you're adding that coverage in.

[00:41:32] And then the loss of rents, it's the same thing, a covered peril, a loss of fire happens

[00:41:37] and you can't rent it for four months.

[00:41:41] And you had, let's say you had $30,000 on the books for stays over the next four months,

[00:41:47] those loss of rents will be able to pay you out on that.

[00:41:50] So you're going to be kept whole when it comes to that loss.

[00:41:54] And so it will minimize the impact as much as possible.

[00:41:57] You know, of course, nobody wants to go through that.

[00:42:00] It'll make it a little more bearable.

[00:42:01] Makes a lot of sense.

[00:42:02] You brought up something that jogged my memory.

[00:42:04] So I always feel like you're supposed to take pictures of everything in your house every

[00:42:08] once in a while so that if you have a claim, you can be like, hey, these are all the things

[00:42:12] that were in my house.

[00:42:13] Is there any truth to that?

[00:42:14] What did that apply to rental properties as well?

[00:42:16] Especially short-term rentals where you have a lot of staged furniture?

[00:42:19] Yeah, 1000%.

[00:42:20] I worked a lot of catastrophes in my day.

[00:42:22] And I'll tell you, you know, when you've got the line fire and you've got all these wildfires,

[00:42:27] you know, out in California, that's all I did.

[00:42:31] I worked all those for 25 years.

[00:42:33] And then when you've got these hurricanes and everything, how can you possibly remember everything

[00:42:40] that you had?

[00:42:41] And a lot of the time you're leaving money on the table.

[00:42:44] So taking that video, having that inventory, doing that is always going to be in your

[00:42:49] best interest.

[00:42:50] Because then when you're trying to fill out that 45-page content sheet where you're supposed

[00:42:54] to remember every toothpick and eyelash and hair product that you have in your home or,

[00:43:01] you know, because a lot of the time, even with Airbnbs, right?

[00:43:03] We'll provide air spray.

[00:43:04] We'll provide blow dryers and all of those things.

[00:43:07] If you don't have a good inventory or good videos or good photos, how are you going to

[00:43:11] remember all those things?

[00:43:12] So I think that's super important, personally.

[00:43:15] I mean, I also think you should have your contents coverage in a separate LLC, but, you

[00:43:20] know, I'm crazy.

[00:43:21] Is there any expiration to that proof if your inventory doesn't change for 10 years and

[00:43:28] you have a video from 10 years ago?

[00:43:30] Is that still sufficient?

[00:43:32] Oh, yeah.

[00:43:34] Yeah, definitely.

[00:43:35] It's essentially still you're just documenting what you had.

[00:43:38] Yeah, like you said, if you've had the same pool table down there for 10 years, no need

[00:43:42] to redocument it, right?

[00:43:44] It's there and it should be covered.

[00:43:47] And, you know, for those 10 years you've been paying on the contents coverage for that,

[00:43:51] so you should reap a little benefit coming back that way if it happens to, you know, be

[00:43:55] lost due to a fire or something.

[00:43:56] The only difference is going to be your depreciation, right?

[00:43:59] Right.

[00:43:59] That's the only difference.

[00:44:00] And then if you replace that, you get it back.

[00:44:03] Yeah.

[00:44:03] Yeah.

[00:44:04] And that's kind of what I was going to lead into next is receipts.

[00:44:06] If you're doing updates on any appliances and things of that nature, keep your receipts

[00:44:11] so you can show, hey, I actually, you know, bought this fridge last year.

[00:44:15] Here's the amount.

[00:44:15] A little depreciated a little bit, but I mean, fridges last for 20, 25 years.

[00:44:20] So you're doing yourself a favor by keeping track of that stuff.

[00:44:24] Got it.

[00:44:24] Yeah.

[00:44:25] And if you have a good bookkeeping and accounting system, you're going to want to keep those

[00:44:28] receipts documented in that accounting system anyway for just bookkeeping and tax purposes

[00:44:33] as well.

[00:44:33] So it's definitely not just for the insurance.

[00:44:37] That's fantastic.

[00:44:38] You mentioned something very casually, and I think I want to bring that back up, which

[00:44:41] is business interruption insurance.

[00:44:44] If you were to lose your revenue from a catastrophe, what that would cover?

[00:44:49] And can you kind of go through that?

[00:44:51] That's, I think, a very interesting topic to make sure our listeners know about.

[00:44:55] Yeah.

[00:44:56] So when you have an occupied policy, right, either a long-term tenant in there or you're

[00:45:01] running short-term rentals, you always want to make sure you have loss of rents in there.

[00:45:05] Standard for us, we offer either six months or 12 months, and we're just going to put the

[00:45:09] amount in there that you would make over those six or 12 months, and that will be your loss

[00:45:14] of rents amount.

[00:45:15] And so in the event of a covered loss, covered loss is important, in the event of a covered

[00:45:20] loss in which the property is deemed uninhabitable, your tenants have to move out, you can't rent

[00:45:27] it out, whatever the case may be.

[00:45:29] At that point, until the property is deemed habitable again or up to the amount that you

[00:45:35] have insured your loss of rents for, you'll receive payment for that loss of rents.

[00:45:39] So let's say for easy math, I charge $1,000 a month for my property.

[00:45:43] So I'm going to put $12,000 on there as loss of rents for the whole year.

[00:45:47] And eight months, we're eight months down the road, and finally the property is ready to

[00:45:54] have it again.

[00:45:55] I'm going to have had $8,000 paid to me in monthly rental dollars.

[00:46:01] And so you'll have that to, again, try to keep you as whole as possible throughout that

[00:46:05] process.

[00:46:06] And so we always stress that if you have an occupied location, you definitely want to have

[00:46:10] loss of rents.

[00:46:12] And then if it's a short-term rental, let's get confidence covered on that as well.

[00:46:15] Because ultimately, that's the purpose of insurance is to make you whole, not for you to make money

[00:46:20] off of it, right?

[00:46:21] It's for you to be made whole.

[00:46:23] And a lot of the time, folks don't realize that you actually can't, you're not supposed

[00:46:28] to make money off of your loss.

[00:46:31] You're supposed to be made whole.

[00:46:32] And so if we have a basic form and we say, oh, well, I have a water loss or I have a flood,

[00:46:40] you know, well, that really stinks because like you said, that's not a covered loss under

[00:46:45] a basic form.

[00:46:46] But on a special form with replacement cost coverage, so then after that loss, if we turn

[00:46:53] in our receipt or because we've replaced everything, we can then get that appreciation back.

[00:46:58] Well, the same thing for when you're talking about loss of rent.

[00:47:02] If you have a lease agreement, you're going to turn that lease agreement in.

[00:47:06] They're going to say, okay, this is going to take approximately eight months to be able

[00:47:09] to get it repaired, you know, so they're going to pay you monthly, just like what you were

[00:47:13] getting paid.

[00:47:14] And so the idea is for us to make you whole or for the carrier to make you whole, you

[00:47:18] know?

[00:47:19] Right.

[00:47:20] Okay.

[00:47:20] Last question.

[00:47:22] What's the most unusual or unexpected claim that you've ever handled and what'd you learn

[00:47:27] from it?

[00:47:28] Oh, I have a DZ for you, but it's a personal claim.

[00:47:32] Did I tell them that one, Trevor, or do you have a better one?

[00:47:35] Oh, I don't really have a great one.

[00:47:37] I had a water backup from a, from like a nine inch rain.

[00:47:42] So mine's just boring.

[00:47:43] So having.

[00:47:44] Okay.

[00:47:44] Well, I have two.

[00:47:45] So I had a client that made the, the, the person living in their home very angry.

[00:47:51] And this was before I knew about TPP protection plan.

[00:47:56] And this client, this tenant was getting removed because they hadn't paid, you know, on their

[00:48:01] rent for like three or four months.

[00:48:03] And so the guy opened up, he cut open every single one of the walls and deprecated and urinated

[00:48:09] inside of the wall.

[00:48:12] Well, that's actually not covered.

[00:48:14] That's actually not covered under some insurance plans because it's tenant negligent.

[00:48:21] That's actually like intentful negligent.

[00:48:24] And so that was a very big lesson that I learned was the fact that that guy deprecated

[00:48:31] and urinated in every single wall because he was mad that he was getting kicked out.

[00:48:36] That's the new one.

[00:48:36] Right.

[00:48:37] But that would be covered under our tenant protection plan, wouldn't it, Trevor?

[00:48:42] Maybe.

[00:48:43] I don't want to speak on that for sure.

[00:48:45] Then that's.

[00:48:46] That's a whole nother level.

[00:48:47] Yeah, once you start getting to intentional tenant damage that that tows the line.

[00:48:53] I don't want to pay your carriers with that.

[00:48:55] But that's why you've got to get a security deposit and a good one, too.

[00:49:00] And I'll give you one other one.

[00:49:02] So I own a home and it's about six thousand square feet.

[00:49:07] And I had a giant tree limb, 10,000 pound tree limb, land on my home during a microburst.

[00:49:15] This just happened in May.

[00:49:16] And I had previously gone through and read my insurance policy, thank God, and noticed

[00:49:23] that it didn't have asbestos on it.

[00:49:25] And so I got the endorsement for asbestos.

[00:49:28] Well, when that tree limb went through, it punctured my home in six different areas.

[00:49:33] And we have $111,000 in asbestos damage where we have to have asbestos mitigation done.

[00:49:40] And how many times do we not read our policy?

[00:49:43] Do we not think about the age of the home that we're purchasing or that we're renting out?

[00:49:48] And we're going to be out of our home for eight to 12 months.

[00:49:52] We just found out today that they have to remove the entire cap of the home.

[00:49:57] And so if we didn't have building an ordinate additional percentage, because the reason

[00:50:03] that they have to replace the entire cap is because they have to bring the home back up

[00:50:07] to code, I'm sorry, code in ordinate.

[00:50:10] If I didn't have that additional endorsement on there, then we would be paying for that

[00:50:14] out of our pocket.

[00:50:14] So we always want to make sure that we know exactly what we want to be insured for and

[00:50:18] why it would be important to be insured for that.

[00:50:21] You know?

[00:50:22] Well, and this is just to round this whole thing up.

[00:50:26] Again, you know, this is something that you can advise clients on.

[00:50:29] You know, you can take a look at their home and say, hey, you should have this.

[00:50:32] You don't need this.

[00:50:33] And that's the whole purpose of this show is A, education, but also padding your Rolodex

[00:50:39] and introducing you, the listener, to service providers that can assist you in your financial

[00:50:47] journey.

[00:50:47] So there it is, the National Real Estate Insurance Group.

[00:50:55] Jules, Trevor, thank you so much for coming on.

[00:50:58] Ryan, do you have anything to close things out?

[00:51:01] No, I just wanted to stress that.

[00:51:02] Like, when you go buy property, you have to deal with a title company, right?

[00:51:06] And you have title exceptions.

[00:51:08] People don't realize that title company is going to put as many exceptions on there as

[00:51:12] possible and not cover your title insurance policy.

[00:51:15] That's like a whole other episode we could go into.

[00:51:17] But insurance, you have the endorsements and you have all kinds of coverages and you have

[00:51:22] all kinds of things that you can do and strategize around, right?

[00:51:26] And just to go at it alone, then call Geico or something.

[00:51:29] You're not going to get advised in a way that you might by calling a company rather than

[00:51:34] calling a company like National Real Estate Insurance Group.

[00:51:36] So that's why we wanted to bring you guys up both on the show.

[00:51:39] So thank you, number one, for coming on.

[00:51:41] And number two, how do people get in touch with you and inquire about insurance?

[00:51:45] And to get in touch with us, you can visit our website at nreig.com.

[00:51:50] You can call us at 888-741-8454.

[00:51:56] Or you can email me directly at emoss at nreig.com.

[00:52:02] And just let me know that you're with Passive Income Pilots.

[00:52:05] I'd be happy to help you out.

[00:52:07] Thank you so much, guys, for coming onto the show.

[00:52:09] Thanks for our listeners for tuning in.

[00:52:12] If you like this episode, drop us a review on iTunes or your favorite podcast hosting site.

[00:52:18] We'd love to hear from you.

[00:52:19] We love the words.

[00:52:20] We love the compliments.

[00:52:22] And catch you on the next episode.