T.A. Swain Insurance Group, LLC

Questions for the real estate investor of 1 - 6 unit properties:

1. What is your intention with this investment? Flip or Hold?
2. What is market value of your investment?
3. What did you buy it for? What amount have you or do you intend to put into the investment? Total Investment?

Why these questions are important:

Insurance companies use proprietary formulas to calculate Replacement Costs (what they believe it could cost them if there is a total loss). Many insurance policies for non owner occupied dwellings require Replacement Cost coverage limits. Based on the above questions it is relatively easy to ascertain whether the investor will be over-insuring their investment thereby creating what is called a "moral hazard". It becomes more fortuitous to have a mysterious total loss than what it is to sell your investment for fair market value. Ironically, the insurance companies often set themselves up for this "moral hazard" with their underwriting guidelines.

If your total investment is exponentially below Replacement Cost, you are not concerned with rebuilding a total loss, you're more concerned with liability issues, you are comfortable with capping your remuneration to match total investment (essentially hedging against a total loss of investment to insurable risks), then you need a product that allows for covering your investment in such a manner. 

They do exist and we have them. Call or contact us to find out more.

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