1. Insurance TIPS FOR REAL Estate INVESTORS
FIVE INSURANCE MUST HAVES TO ENSURE YOUR PROPERTY OR PROJECT IS PROTECTED by
Harold Newbill, CIC, AAI, CISR

2. Introduction: Harold Newbill McClatchy INSURANCE AGENCY
Harold joined McClatchy Insurance Agency in 2004 working first with his father Bill before becoming the Agency Owner in With over 15 years of experience advising Real Estate Owners and Investors he continues the agency’s 90 plus year tradition of serving the Sacramento business community. His hands on approach to educating real estate owners ensures they obtain the best advice and coverage they need. When he is not walking a property with a client or advising them on how to best protect their business, he enjoys learning about real estate, history, spending time outdoors and motorcycle travel. Harold lives in Sacramento with his wife Kelly and two sons Josh and Sam.
We are all here for similar reasons. To learn more about how to invest in real estate. While we may do this through different paths, each of them have risks that can take a good investment and turn it into a tragedy.

3. The DANGERS OF GOING WITHOUT THE INSURANCE YOU NEED OR UNDERINSURING
Going without insurance or cutting corner can be costly. Loss of rental income due to a fire and vacancy, out of pocket costs to repair your property, lengthy litigation taking you away from managing your property all can affect your real estate business.

4. Why people CUT CORNERS AND DO NOT BUY WHAT THEY NEED
I have been doing this for many years, run my business well / I know what I am doing and will not have an accident
No mortgage or debt to the property
It doesn’t fit the budget of my investment/project
I am a contractor / I know a contractor who says they can build it for less
They don’t work for me, that’s someone else’s problem.

5. WHAT FACTORS ARE IN THE COST
Property – Age of the structure, condition of the “big four” (HVAC, Plumbing, Roof and Electrical) construction type and style. Price comes down to cost per squarefoot to replace.
Liability – Past claims, dogs, dangerous features such as pools, playgrounds, vacant property, construction area. Past experience at that property or with the owner determines future cost
Course of Construction – Construction cost breakdown, timeframe.
Workers Compensation – Payroll, number of employees, type of work (classification), experience and claims history.
Cost per foot trends going up
Property – Age of the structure, condition of the “big four” (HVAC, Plumbing, Roof and Electrical) construction type and style. Price comes down to cost per squarefoot to replace.
Liability – Past claims, dangerous features such as pools, playgrounds, vacant property, construction area. Cost is often determined
Course of Construction – Construction cost breakdown, timeframe.
Workers Compensation – Payroll, number of employees, type of work (classification) and experience
g up – Fire zones.

6. THE FIVE TIPS TIP 1 - PLAN FOR THE COST TO REBUILD YOUR PROPERY
TIP 2 - PLAN FOR HOW LONG IT WILL TAKE TO REBUILD
TIP 3 - BE PROACTIVE AND PREPARED FOR LITIGATION
TIP 4 - MEDICAL PAYMENT COVERAGE IS NO FAULT COVERAGE
TIP 5 – KNOW WHO COVERS THE WORKER IF THEY ARE INJURED

7. TIP ONE: PLAN FOR THE COST TO REBUILD YOUR PROPERTY
Questions and Pitfalls:
Cost of materials when you need them?
Will contractors be available when you need them?
TIP: Ask for replacement cost estimator from your agent and discuss based on cost to hire someone to rebuild rather than rebuild yourself.
Materials + Time + Labor
Major disasters reduce available contractors and materials
Shortage of skilled workers to get someone on the job

8. TIP TWO: PLAN FOR HOW LONG IT WILL TAKE TO REBUILD
Questions and Pitfalls:
How long will you be without rental income or able to sell your flip?
Construction Permitting
Weather Delays
Finding a contractor
Disaster area cleanup delays
TIP: Discuss with your agent what your monthly costs are and make sure your policy has at least 12 months of coverage for lost income.
* NAHB Eye on Housing article 2013
Materials + Time + Labor
Major disasters reduce available contractors and materials
Shortage of skilled workers to get someone on the job
2013 graphic – it may be 25% to 50% longer depending on the area.

9. TIP THREE: BE PROACTIVE AND PREPARED FOR LITIGATION
Tips For Rentals:
Requiring Tenants to carry renters insurance
Non smoking properties
Repairing hazards quickly
BBQ area or no BBQ’s
Use CAA lease
Have a relationship with eviction attorney
For Flips
Fencing the property
Requiring all contractors to carry 1 Million or more in Liability/ required and verify Workers Compensation Insurance for all employees and subcontractors
Jobsite safety inspection
Keeping new materials locked up/secure
Materials + Time + Labor
Major disasters reduce available contractors and materials
Shortage of skilled workers to get someone on the job

10. TIP FOUR: MEDICAL PAYMENT Coverage IS NO FAULT COVERAGE
Questions / Pitfalls
Having the minimum or no coverage for Med Pay increases likelihood of costly and lengthy litigation
TIP: Purchase the maximum for this area which is 5,000 or more in coverage.

11. TIP FIVE: KNOW WHO COVERS THE WORKER IF THEY ARE INJURED
Questions / Pitfalls
Onsite managers who are given discounted rent to manage your property
Vendors such as handymen and landscapers
If they don’t have it, it may fall on the owner if a worker is injured
TIP: Purchase workers compensation and/verify that contractors have it and name you as an additional insured.
The ABC’s and 1099’s today

12. IN REVIEW TIP 1 - PLAN FOR THE COST TO REBUILD YOUR PROPERY
TIP 2 - PLAN FOR HOW LONG IT WILL TAKE TO REBUILD
TIP 3 - BE PROACTIVE AND PREPARED FOR LITIGATION
TIP 4 - MEDICAL PAYMENT COVERAGE IS NO FAULT COVERAGE
TIP 5 – KNOW WHO COVERS THE WORKER IF THEY ARE INJURED

13. Questions

14. 2410 Fair Oaks Blvd., Ste 140 Sacramento, CA 95825
(916) (916) (fax)