, , ,

Before You Switch Insurance

Before You Switch Your Insurance

The insurance market in Arizona is chaotic right now, and rates are climbing across almost every company in the state. As a result, many investors feel real pressure on their already thin cash-flow margins and start looking for savings anywhere they can—often by switching insurance carriers.

As a broker, the goal is to find value for clients: the coverage they actually need at the lowest reasonable price. Value is not just about the premium; it is about protecting the investment while keeping costs in line. In the past, simply moving to a new company often worked, but today things are different—“Not so fast, my friend!”

 

Why Switching Is Riskier Now

In addition to higher rates, insurance companies are tightening their underwriting standards. That means:

  • More detailed questions and paperwork up front

  • Stricter eligibility guidelines

  • Limited coverage options

  • More inspections and tougher inspection standards

Even after a policy is issued and paid for, carriers usually have about 30 days to decide whether they will keep or cancel it. If an inspection uncovers problems, the company can cancel the policy. Once that happens, finding another carrier can become very difficult. That is why it is critical to understand a few key issues before switching.

Five Things To Check Before You Move

1. Plumbing and electrical

If the property has galvanized plumbing or a fuse-based electrical system, most companies will decline it. These older systems are highly associated with costly water and fire losses. Galvanized or polybutylene pipes can fail suddenly, and fuses often signal that the electrical system has not been updated in decades. Upgrading these systems before shopping your insurance can make a huge difference.

2. Peeling paint and dry rot

Peeling or flaking exterior paint seems minor but sends a strong signal to underwriters about overall property maintenance. Sun damage and moisture can lead to dry rot, split fascia boards, and other issues. Many carriers now treat visible exterior neglect as a red flag and will simply walk away. A basic exterior tune-up and fresh paint can help the property pass inspection.

3. Overgrown trees and landscaping

Large, overgrown trees and shrubs raise concerns about roof damage and general upkeep. In a monsoon storm, branches can easily damage roofs, walls, or power lines. Carriers often assume that if the landscaping is not maintained, the rest of the property may be neglected as well. Trimming trees and cleaning up landscaping before an inspection can prevent automatic rejections.

4. Yard clutter and debris

Piles of wood, old vehicles, tools, and miscellaneous debris scattered around the yard are another major red flag. Even if the owner would never allow that at their own home, tenants might. Yard clutter increases fire risk, liability exposures, and pest issues. Clear, written lease terms and regular property checks can help, but before switching carriers, make sure the exterior is clean and orderly.

5. Roof age and condition

Roof issues are becoming one of the biggest reasons for non-renewals and cancellations. Many carriers now require that shingle roofs be replaced within the last 15 years. Some will reject a property if the roof appears older than that; others may limit claim payouts based on age and condition. Missing shingles, curling or warped shingles, and “granular loss” (loss of the protective grit) are all concerns. Even if a roof is rated for 30 years, carriers may still insist on replacement sooner than owners expect.

When Switching Might Make Sense

Insurance brokers want to write policies and help clients save money—but not at the cost of leaving them uninsured after a cancellation. Moving to a new company only to be dropped shortly after helps no one.

Before switching, make sure:

  • Plumbing and electrical systems are updated and acceptable

  • Exterior paint and trim are in good condition

  • Trees and shrubs are trimmed and maintained

  • Clutter and debris are removed from the yard

  • The roof is in good condition and within carrier age guidelines

If those items are in order, shopping for a new company might be a smart move. If not, it may be wiser to address deferred maintenance first and consider switching only after the property is truly ready.

/by

Why Real Estate Investors Should Choose Gila Insurance Group

As you build your investment team, everyone knows about getting a lender, a real estate agent, a property manager, etc. But far too many people forget about adding an insurance broker to their team. Yet getting the right insurance broker on your team is important, the loan officer will require an insurance policy, and there is no need to hold up the process for insurance.

Having an insurance broker who knows your business can ensure that you have the right coverage to protect your assets, and can communicate important information to the insurance company. For example, if you have a buy and hold strategy, your exposure to liability can increase dramatically as you add new properties. The more assets you hold the more you have to lose. Ensuring you have an umbrella policy with sufficient limits is important in protecting those assets.

Or, if you have a fix and flip business, working with a broker that understands that you may have some building materials around the house, as you rehab it, can make a difference. Because your policy can be cancelled if that kind of information isn’t communicated to the insurance company. Team members that know your business make a difference. Plus there are a few other things that set us apart.

  1. We represent multiple companies. Who cares?! You should, because multiple companies helps you get the coverage you need. Not every company has great rates. You have probably noticed that insurance prices go up, which sends you off to find another company. But why should you have to find a new insurance team member? We represent multiple companies so that we can get you a policy that fits your needs and ensures you get the right coverage at a price that won’t kill your profit.
  2. We have unique products. What products?
    1. 10+ – if you have more than 10 investments we can simplify your life significantly AND save you tons of money.
    2. Flood -How is flood unique? Well, our program is underwritten by Lloyds of London, NOT the US Government. That means better coverage, more flexibility, and NO ELEVATION REPORTS.
    3. Umbrella Coverage – Chances are if you are sued a standard policy doesn’t provide sufficient liability coverage. Umbrella coverage not only provides that coverage, but will also fill in some gaps that your standard policy does not cover.
  3. We are committed to you, the investor. We got into this market because we love real estate. However, we are also insurance nerds. Ours was a match made in heaven. But beyond that, we strongly feel that if you are investing properly you need an insurance person on your team–someone who understands your needs, and who specializes in covering your investments. Its true, if you want us to insure your home, auto, and sell you a life insurance policy, that’s not us. Truth is, if you are doing this right, you need to hold your properties in LLCs completely detached from your personal assets, and you should be insuring your investments with someone who understands them.

For more information, contact Gila Insurance. Our agents can provide you a quote or review your current policy.

/by