If you could sum up the experience as a real estate investor into one phrase it might be, Plan for the worst, expect the best. We never expect to walk into our own project to find the walls stripped for copper or an HVAC unit missing. But an investor can plan and safeguard themselves and their property with the proper insurance coverage for their needs.

As a real estate investor and homeowner it is not enough to have insurance coverage. You need to understand the level of your coverage. The three main policies an investor should understand are builder's risk, umbrella and rental dwellings.

Builder's Risk
A builder's risk policy is designed to address the exposures usual to an unoccupied structure under construction or renovation. It also takes into consideration the progress and ongoing change in value of a property as it is being renovated. The policy can include the theft of building materials such as copper or even your workers' tools on site at the property.

A standard fire policy cannot assign a future value to the property. The policy applies to the property only as it exists, without completed repairs. Investors with standard fire policies are putting their profit at risk by not being properly insured.

A builder's risk policy will apply to the total completed value.

The completed value consists of:

• Purchase price of the property
• Cost of the improvements
• Soft Costs
• Profit

Umbrella
An umbrella policy kicks in when you reach the limit on the underlying liability coverage in a homeowners, renters, condo or auto policy. If you are ever sued, your standard homeowners or auto policy will provide you with some liability coverage, paying for judgments against you and your attorney's fees, up to a limit set in the policy.

A typical homeowner's insurance policy will provide a max of $500,000 of personal liability coverage. However, if your total assets, including your home, are more than $500,000, you should also carry an umbrella liability policy. Typically, a $1,000,000 umbrella policy will cost only a few hundred dollars a year.

Rental Dwellings
A policy for a rental property contemplates an occupied status and includes landlord liability and loss of rents coverage. If a rental property is insured as occupied when in fact it is not occupied, this could result in issues if a claim is filed. In many instances, all properties can be bundled into one policy savings the investor time and money.

Work with an agent you trust. It is often best to work for an independent agent who can shop for the best policy.

ReCasa Financial Group working together with City Securities Insurance Division is now able to offer the insurance tailored to the specific needs of the real estate investor.

For insurance questions, contact independent agent Steve Wells at 1.800.800.CITY or
e-mail swells@citysecurites.com