As a real estate investor, getting the right insurance is among the most important things you can do to protect yourself, your family, and your business. Getting the right insurance means buying the right mix of policies and protections.
Join Aaron Porter, Royal Insurance Manager, as he discusses how a specialized agent helps provide holistic protection for your family, business, and legacy in "Getting the Right Insurance."
This article discusses the best practices for finding and buying the right mix of insurance to protect your family and assets.
Getting the right insurance is essential, even if the upfront cost seems expensive. Moreover, you can't put a price on the peace of mind, emotional well-being, and financial freedom protection that insurance provides.
Royal Insurance enables you to save time and money by proactively seeking the correct coverage for your needs, including the following:
Getting the proper homeowner and auto insurance is critical because it reduces the money you have to pay out of pocket if the worst happens. The cheapest policy is rarely the best and may leave you holding the bag in the event of an accident.
You need to determine the amount of coverage by identifying the following:
When selecting a provider, it's better to work with a single, nationwide agent with access to many carriers with superior customer service and claims payouts. Every year, you and your insurance agent should go over your specific circumstances to adjust your coverage level.
Getting the right insurance for your rental properties includes discussing the following with your real estate agent:
In most cases, the type of policy you'll want to get is a Landlord/Dwelling DP-3 policy. Most DP-3 policies cover the following:
When you get the policy, your name will go on the policy; then, your agent will add your Land Trust and your operating LLC as additional insured on the property.
Other people to include in the policy are the following:
For personal liability, you must have the required minimum for an umbrella policy to activate in the case of a claim.
An umbrella policy is additional insurance that provides more protection beyond your existing insurance's protections. Getting the right umbrella insurance enables you to leverage the policy as a cost-effective supplement and amplify your underlying insurance.
The general rule to determine the coverage you need for umbrella insurance is that it should equal your net worth.
When determining the amount of insurance you need, identify your replacement cost. That is the cost of your initial investment and appreciation.
Why would you voluntarily pay more? The insurance company will be less likely to claim a lower payout based on depreciation.
They'll be more inclined to:
There are many factors in getting the right insurance for your business. Your agent and carrier need to know how your company operates and how you plan to grow to have insurance tailored to your specific needs.
As your business grows and adapts to change, you need business insurance that evolves and adapts to your needs. To make sure you get the most out of your business insurance, you should:
You have the option to get term or whole life insurance. Getting the right insurance depends on your financial circumstances and the protection you need.
Term life insurance is a type of life insurance that covers a specific time, like 30 years from the start date. The best term life insurance has the following minimum coverages:
Your age and health are the two most impactful cost factors for term life insurance.
Whole life insurance provides a death benefit, accumulates a cash value, and covers the insured's entire life. You can customize the policy's parameters, including the following:
Key person insurance protects your business operations. A key person or key man policy creates a funding mechanism resulting from an insured person dying or becoming disabled.
If the insured dies or becomes disabled:
You'll need to review the coverage required for each key person periodically.
Insurance is crucial for protecting your family, real estate, and business. To fully protect yourself, getting the precise mix of coverage and policies is imperative.
Learn more about the right mix of strategies for you as a real estate investor in Royal Investing Group Mentoring. We'll discuss the finer points of asset protection, tax savings, estate planning, and investment opportunities that will support your investing goals.
Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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