#2 Insurance on L/Os question - Posted by Tom (PA)


#1

Posted by Bud Branstetter on December 08, 1998 at 21:06:22:

If the optionor was sharp he would ask to have an insurable interest. If you do this in a land trust and show him the land trust would get the insurance proceeds there shouldn’t be a problem. If you were sandwich leasing directly showing that their was enough to cover any rebuilding required had better satisfy him becausee he is not the one in control. In reality one in a hundred might ask the question.


#2

#2 Insurance on L/Os question - Posted by Tom (PA)

Posted by Tom (PA) on December 07, 1998 at 02:03:02:

I posted a question the other week about obtaining insurance on a L/O as the master tenant. I have Bronchick’s L/O course and I realize that I need to get a preformance mortage to be able to create an insurable interest. However, my question is, as a L/O optionee, do I need my own insurance policy. Shouldn’t the owner of t building maintain his/her own policy, on which I would be listed as the “additional insured.” This is a foggy area concerning insurance with me. Is the insurance policy I get to cover the subtenant relationship that I develop. What type of policy would I get that would cover what the owner’s policy wouldn’t cover? Any response would be appreciated.

Tom N. (PA)


#3

Re: #2 Insurance on L/Os question - Posted by Bronchick

Posted by Bronchick on December 07, 1998 at 10:03:49:

If you have a mortgage on the property, the owner’s policy is amended to add you as a lienholder.


#4

Re: #2 Insurance on L/Os question - Posted by Bud Branstetter

Posted by Bud Branstetter on December 07, 1998 at 08:33:10:

Many times you will have the owner transfer title to a Land Trust. At the same time you have them contact their insurance company and add the land trust as the additional insured. You also get a limited power of attorney letter from them to be able to cash and checks for insurance losses.

If you want to spend the additional money you can own your own policy directly.


#5

Re: #2 Insurance on L/Os question ??? - Posted by JOHNMAN

Posted by JOHNMAN on December 08, 1998 at 18:14:56:

I like this question. But it wasn’t answered. Does the optinee need to get his/her own insurance on an L/O deal? If so what do you tell the insurance company since you don’t own the property and what kind of insurance do you get? Am I asking the right questions?

JOHNMAN


#6

Re: #2 Insurance on L/Os question ??? - Posted by Bronchick

Posted by Bronchick on December 09, 1998 at 12:44:19:

You do not need additional insurance if you are named as lienholder. If you concerned with possible liability, buy a renter’s policy, or better yet, make your subtenant buy it naming you as insured (I prefer paying the policy myself and including it in the cost of the rent - it is only about $12 a month).