Ask An Advisor - Insurance Edition

Royal Legal Solutions Insurance Manager Aaron Porter, a seasoned expert, hosted the highly informative Ask An Advisor-themed group mentoring session.

His presence added immense value as he enthusiastically engaged in a dynamic Q&A session, providing invaluable insights and expertise on various insurance topics.

If Fire Or Flood Destroys My House, Does The Insurance Company Pay The Homeowner And The Bank?

When a fire or flood destroys a house, the way the insurance company pays out depends on the specific terms of the homeowner's insurance policy:

Insurers typically pay the policy limits if a total loss occurs.
Insurance does not typically pay off a mortgage if a house is destroyed by fire or any other disaster unless specified in the insurance policy.

How Do I File An Insurance On Behalf Of A Deceased Person?

Filing a property claim on behalf of a deceased person is a procedure that requires specific steps. Here's a general guideline:

Appointment as Administrator: If the deceased didn't leave a will, you'd most likely need to be appointed as the administrator of their estate to handle their affairs, including filing insurance claims.
Obtain the Death Certificate: You will need a copy of the death certificate, which verifies the person's death and your authorization to act on their behalf.
Identify the Insurance Policy: Locate the insurance policy held by the deceased individual. It could be a homeowner's insurance policy or another type of property insurance.
Contact the Insurance Company: Inform the insurance company about the death immediately. Provide them with a copy of the death certificate and other necessary documents.
File the Claim: Follow the insurance company's process for filing a claim, which usually involves completing a claim form and providing any required documentation.
Handle the Payout: Once the claim is approved, the payout may go directly to the estate to cover any debts.

The Nuances Of Flood Coverage

Most standard homeowner policies do not cover flood damage. A homeowner must usually purchase separate flood insurance to cover flood-related damages if they live in a flood-prone area.

The National Flood Insurance Program (NFIP) offers insurance to any homeowner, regardless of flood risk.

This insurance offers up to $250,000 in building coverage and $100,000 in contents coverage.
Homeowners in certain flood zones aren't legally required to purchase flood insurance.

It's worth considering purchasing flood insurance if you live in a flood plain, near a river, or on the coast.

What Happens If My Homeowner Insurance Lapses?

If your insurance lapses, you're uninsured for that period:

It exposes you to significant financial risk if something happens to your home during the lapse.
You won't be able to claim any damage that occurred during this time.

A lapse in coverage can happen due to the following:

non-payment of premiums
non-renewal of the policy
if the insurance company declines to renew your coverage

Many insurers typically have a grace period, usually up to 30 days, from the date of the lapse due to a missed payment. If your insurance lapses, you'll lose liability coverage. You'd be financially responsible for their medical bills if anyone gets injured on your property.

Will I Be Penalized If I Resume Insurance Later?

If you paid your house off and you decide to discontinue your home insurance, there won't be any legal penalties, but it's risky.

You're 100% liable: Without homeowners insurance, you'll be financially responsible for any damage to your property or personal liability issues that might arise--anything from fire damage to a visitor injured on your property.
It's expensive: you may face higher premiums if you decide to resume your insurance later. Insurance companies often view lapses in coverage as risky, which can result in increased costs for you. Some insurers might even refuse to insure previously uninsured properties in extreme cases.
You may be uninsurable: If your property has been without coverage for a significant period, the insurance company may require an inspection before issuing a new policy. They could decline to issue the policy if they find undisclosed potential risks or hazards, such as a cracked foundation or a roof needing repair.

Key Takeaways

Homeowner's insurance policies usually pay both the homeowner and mortgage lender for fire or flood damage, but they don't pay off the mortgage unless stated in the policy.
To file an insurance claim for a deceased person, you must be appointed as an administrator, obtain a death certificate, identify the insurance policy, contact the insurance company, file the claim, and handle the payout.

How Title Insurance Works

Anytime you transfer property, you must consider the title insurance implications. Title Insurance will generally being validated upon the transfer of the property. However, title insurance isn't invalidated. If you transfer the property to a wholly owned LLC, that is an LLC that is completely owned by you, the person that also own the property, will also will invalidate it.

If you add your spouse to title for example, that'd be a transfer. But in that circumstance they're not going to invalidate. You also can transfer the property to an inter vivos trust where you are in the settler of that trust. This is the type of strategy that we'll be using with inside of our anonymity land trust and we start transferring properly.

My name is Scott Smith. I'm an asset protection attorney. I'm a real estate investor and I want to help. Click here to set up a consultation today!

Advantages of Having an LLC Over Insurance For Asset Protection

Insurance will not protect you from most lawsuits that will happen regarding the transaction of your buying and selling of real estate. Every time that you're entering into a contract. Every time you actually sell a piece of property, every time you lease to a new tenant. These are all things insurance doesn't cover. Because of that, the only way for you to save your hard earned dollars is an asset protection strategy. That is the proper LLC and company structure.

Set up an asset protection consultation today!

Investment Property Insurance Questions You Should Ask Your Agent

Real estate investors that do well are smart folks, but it can be hard for smart people to admit they aren't experts at everything. Many of us have successful careers outside of investing. Maybe you're a CPA or a neurosurgeon, or an attorney like myself. But smart people like ourselves need to be mindful that we are also wise. Wisdom is knowing that there are things you don't know.

And what do the wise among us do when we don't know something? We ask questions! Insurance is vital, and typically a legal requirement for your investment properties. Insurance alone is not an advisable strategy for asset protection purposes. At Royal Legal Solutions we highly recommend insuring your properties as your first line of defense.

Question 1: What Types of Policies Are Available To Me?

Typically, you'll find policies along a spectrum of Basic, Broad, Specified, and Comprehensive. The first is exactly what it sounds like: the bare minimum. Comprehensive is the opposite end of the extreme, and the most all-inclusive kind of policy you can acquire. A good starting point is to write down what you have; i.e. assets, debts, dependents, monthly income, monthly expenses, and how you make a living. This way you can formulate a plan for what coverages you will need and work from there.

Question 2: Can You Please Explain My Policy And What It Covers?

This is fairly straightforward. You may also take this opportunity to ask what other types of investment property insurance the home already has (fire, etc.) to get the best idea of your needs.

There's a second part to this question: you will also want to ask what your policy does NOT cover. Some policies cover slip-and-fall accidents, and some don't. Many investors need this coverage, especially those who flip or rehab homes. Think about it: with all the contractors, laborers, and both prospective and future tenants coming through the property, you can't risk not having your backside covered. Asking what isn't covered will help you make the most informed decision possible.

One major concern you should know about your policy is whether it covers the loss of rent. Landlords can face this in situations as extreme as natural disasters (just ask the landlords who had to rebuild after Hurricane Sandy) or as mundane as a few teenagers armed with spray paint defacing your property. (maybe also add about short-term rentals, where damage to the property or furnishings in the property cause a loss of revenue? Assess your risks alongside your agent, but remember insurance is cheap when you think in terms of loss so investors who can afford it should take advantage.

Question 3: What Information Do You Need For An Investment Property Insurance Quote?

This may seem obvious, but the details of your situation will help the agent get you the most appropriate and accurate quote for your needs. Here are some typical things you will have to provide:

Identifying information. Full Name, D.O.B., Social Security Number, Drivers License Number
Special Circumstances. These include details about you and your property. If you aren't certain of the home's condition, or what remodeling you may need to do, your agent can help. Agents can even assist you in unearthing records of previous repairs to the home--a move that will save you time and money if you plan to force appreciation on your rental property.

Question 4: What Is My Property's True Replacement Cost?

TRC is different from the value of your home but critical for real estate insurance purposes. It's usually measured in square footage, and a good agent will work with you to determine your need. Feel free to shop around with various agents to ensure you're getting the best, honest deal. There are over 4000 different factors that go into determining the assessed value of a property.

Final Notes: The More You Know, The Better Off You'll Be

You want an agent who is both transparent and able to answer all of these questions. You can start by researching reputable agents online. If an agent won't answer these questions, that's a giant red flag. Move on.

Still stuck? We now have an in-house insurance agent on staff to assist real estate investors. Together we can streamline coverage through the policies we offer to ensure that you are protected and that your loved ones are cared for in the event something unforeseen occurs. We offer a single point of contact for all of your policies including auto insurance, property insurance, and life insurance. To get started, take our Insurance Quiz and book your free consultation. You've got nothing to lose in requesting a quote and everything to gain if we can save you money.

Build Your Real Estate Empire & Asset Protection Plan With the Pros

Welcome to our blog. I congratulate you on taking the time to become the best real estate investor you can be. You've come to the right place to do it! The Royal Legal Solutions blog contains a huge amount of information related to real estate investing and maximizing your profits.

At Royal Legal Solutions, we're here to make sure you have the best tax and legal information to make the most money you can. Not only are we tax and legal professionals, but we're also real estate investors ourselves.

Our specialty is asset protection. We make sure people can't sue you and force you to liquidate your properties. We devise a unique asset protection strategy for your assets to mask your ownership and build an impenetrable legal wall to protect you from lawsuits.

An Asset Protection Strategy Is Essential

You can't expect to last long in the real estate industry without some form of asset protection. And by the way, insurance doesn't count. Insurance won't protect you from lawsuits.

The only way you can protect yourself from lawsuits is with an asset protection strategy. By using a combination of legal structures, such as an LLC, people will think twice about filing a lawsuit against you.
As a lawyer myself, you can trust me when I tell you that few lawyers are willing to try and "pierce" an asset protection strategy without being given a large down payment by a client. And why? Because an asset protection strategy makes you extremely difficult to sue.

It takes time and effort to sue someone with an asset protection strategy. And that's just to be able to file a lawsuit. Winning a lawsuit against someone with an asset protection strategy is a whole different story.
Then even if they do win, they'll get next to nothing in the first place. That's the power of an asset protection strategy, and that's why so few lawyers will be willing to try and sue you if you have one.

Start Winning Today With Royal Legal Solutions.

If you're new to asset protection, we're here to help you learn about it with our many free articles and posts on the subject. For instance, did you know that a good asset protection plan saves your money?

My name is Scott Smith, and I'm the founder of Royal Legal Solutions. I'd like to personally thank you for visiting our website. If you have any questions feel free to comment below, or call us to schedule your personal asset protection consultation.

Your Insurance Company Won't Help You Protect Your Assets

We’ve been trained to believe insurance companies are there to watch our back. The reality is that your insurance provider is a company, just like Nike or McDonalds. They exist because they make more money than they spend.

These insurance companies are more than happy to take your money as long as things are going well. You would never have any reason to doubt their protection until you decide to file a claim...and get dropped!

Have you ever noticed how people start suing insurance companies every time a natural disaster happens? Why do you think that is?

Now of course, you should have insurance and you should file claims. This is going to work out fine most of the time. But the reality of the situation is that when you file a big claim, they are going to take a second look and see if they can wiggle out of their responsibility to cover you (see our landlord FAQ article for more on this).

You may just find yourself suing your insurance company like the folks after disasters.

Your Insurance Company Won't Protect Your Assets

While everything's fine, your insurance company will take your money. Yet as soon as something happens and you decide to file a claim, you get dropped. The reality of the situation is, if you have a big claim you'll end up having to sue your insurance company just to get them to pay out.

As an investor you shouldn't rely on filing a claim with your insurance company to protect your assets. Sure, they're possibly going to cover the $5,000 slip and fall case that happened on your icy front porch.

But what they won't cover is where the real story is here. Here's an example of a claim that only an asset protection plan will help. Imagine telling your insurance company that grandma fell through the staircase, broke her hip, and now will be permanently disabled for the rest of her life. You'd almost certainly be unceremoniously dropped.

Don't expect their empathy, either. Instead, they're going to say it was your fault grandma fell through the staircase because you should've known there was something wrong. They'll say your claim is a case of "gross negligence", which is your fault and thus outside of your policy limits.

Your insurance company knows they can do this. The fact is, they have millions of dollars to spend on their legal team, whereas most investors only have a few thousand dollars to spend on ONE attorney.

Protect Your Assets By Being Proactive

Instead of relying on your insurance company to protect your assets, be proactive. You worked hard to get to where you are now, don't lose what you've built.

What you need to do is protect your assets with a proper asset protection strategy, incorporating anonymous trusts and LLCs/Series LLCs to keep people from coming after your money. These legal structures will stop lawsuits before they happen.

Asset protection involves making your ownership anonymous, as well as legally limiting your liability. People won't sue you if they think you have nothing worth taking. They certainly won't be able to sue you if they don't know what you own. Doesn't that sound a lot better than filing a claim? Learn more about basic asset protection strategy from the many articles here on the Royal Legal Solutions website.

If you have any questions, just comment below and I'll answer them as soon as I can. If you're not willing to risk everything you've earned on the futile hope that insurance will protect you, schedule your asset protection consultation today.

How My Client's Asset Protection Strategy Saved Her From Being Sued

On my blog I've gone over countless ways to protect yourself using an asset protection strategy. But what I haven't done is shown you real-life examples of how asset protection can benefit you, until now.

Get Information From Real Asset Protection Experts

There's a lot of bad information out there about how to protect your real estate investments. You may have seen YouTube videos or read forum posts from people who claim to be experts. T

he thing about the internet is, anyone can claim to be an expert. Even if they've just read a single Wikipedia article on the subject.

You may have even received bad advice from your CPA or an attorney who's a general practitioner in the field. These people will tell you real estate insurance is enough to protect you. But the fact is they don't know. Their advice isn't just wrong, it's dangerous.

Insurance covers things like negligence or a slip and fall in a house. It doesn't cover a lifetime of fraud or breaches of contract. You may think "hey I'm an honest person, I don't need to worry about lawsuits."

But that's not why lawsuits happen.

Understand Why Lawsuits Happen

The majority of lawsuits happen because of a misunderstanding. Take for example a client of mine. She recently bought a house and renovated it. During her renovations she put in some new plumbing because she thought it would add more value to the house.

Then she went ahead and told the person buying the house how she re-did the plumbing. So they sent her an email asking what plumbing she replaced. She responded, "Well, I re-did all the plumbing in the house."

So they bought the house from her. Some months after the sale there was a leak that caused tens of thousands of dollars worth of damage. The people who bought the house from her threatened a lawsuit based upon her email that said she replaced all of the plumbing in the house.

Now, this seems to be a simple misunderstanding of what she meant in her email, but that was the basis of this lawsuit. I'd like to point out that this is actually a case of intentional fraud, which isn't something an insurance policy would ever cover.

My Client's Asset Protection Strategy Saved Her Thousands

Luckily, my client had the foresight to put in place a proper asset protection strategy, including a series LLC with an Anonymous Trust. Because of the superior position she was in due to her asset protection strategy, they eventually dropped the lawsuit against her.

As real estate investors, we should all be using this type of asset protection strategy. If you have any questions about asset protection, feel free to ask me in the comments below or read more of my free educational pieces.

Why Real Estate Investors Can't Afford To Rely On Insurance For Asset Protection

If you're a real estate investor, it's time to ask yourself an important question: are you protected?
Before I began specializing in asset protection I would play for the other side. Meaning, I would sue people. Take it from me, it's easy for an attorney to sue you if you don't have a proper asset protection strategy in place. There are many ways to protect yourself, such as with a Series LLC, or a self directed IRA LLC.

Insurance Won't Always Protect You From Claims on Your Property

An insurance claim usually results from a "slip and fall" on a property or something else you would normally characterize as an accident. Typically this is what your insurance is willing to cover. But your insurance doesn't cover you from any intentional acts that might occur.
What's considered an intentional act? Well, that's depends what you consider to be intentional.
And that's where the law comes in!

How Insurance Failed One of My Clients.

A client of mine flipped a house and renovated it by replacing some of the plumbing underneath the house. However, my client told the buyer that all of the plumbing had been replaced underneath the house. But unfortunately she told the buyer in one email that all of the plumbing had been replaced.
As a result, my client was hit with a lawsuit alleging intentional fraud, an incident that insurance doesn't cover. Yet even after this simple misunderstanding, my client walked away from that lawsuit without paying a dime. This was all because she had a proper asset protection strategy in place.
At Royal Legal Solutions , we help real estate investors maximize their asset protection.
My name is Scott Smith. In addition to being an attorney, I'm a real estate investor myself. I created this company to help investors like you protect your assets. Don't wait until you get sued. Be proactive. Call Royal Legal Solutions now at [GLOBAL VAR=phone-number] to schedule your asset protection consultation today.