ANOTHER insurance lesson learned - Posted by Jimmy

Posted by Jimmy on May 31, 2006 at 14:34:06:

Your arson exapmle is BS.

I have had two arson fires at my properties, and my brother had one earlier this year. I had opportunity to talk to the fire marshalls. Arson is VERY EASY to identify, and VERY HARD to prosecute.

and once we have an arson, the vacancy policy will not pay.

so, you are aserting that there is an elevated risk of accidental fire in a vacant unit (like a lightning strike, or an electrical fire, or a fire at an adjacent property buring down my property.).

I do not buy it. The only elevated risk I see is the risk associated with small problems (otherwise seen and reported by occupants) which develop into big problems (and wouldn’t have been big problems had occupants been present).

ANOTHER insurance lesson learned - Posted by Jimmy

Posted by Jimmy on May 30, 2006 at 13:38:49:

Ouch !!

did not see this one coming. Learn from my mistake.

i am well aware that vacant properties are excluded from typical insurance policies (if vacant at time of policy initiation or vacant for more than 30 days after policy initiation). and I am diligent about informing my agent of these situations, revving up special coverage for whatever period of time is necessary.

BUT… it turns out that my vacancy policy excludes vandalism and theft from its coverage. I had 4 outside AC compressors ripped off from a constuction site this weekend, and my policy apparently will not cover it.

HERE’s what burns my butt. It is precisely the elevated risk of theft and vandalism (I thought) that is the reason for the higher premiums for vacancy policies.

A vacant unit is not exposed to elevated risk of weather issues, falling trees, accidental fires, etc.

Maybe I could explain it better … - Posted by Frank Chin

Posted by Frank Chin on June 01, 2006 at 16:06:35:


I have to agree that your insurance agent did not do a good job getting you the proper coverage, either out of ignorance, or laziness. They are the experts, NOT YOU.

Though I wonder if they have E&O coverage that you can make a claim on.

I had a talk with my agent way back, and she warned me about have a place vacant more than 60 days. By vacant, she means nothing in the place to be taken, though its been known that vandals sometimes remove applicances, stoves, pipes, and wiring.

Like you, I made the argument that the risk for a tree falling down, a passerby slipping is the same whether occupied or not. She pointed out that from the insurance risk point of view, having someone there when a tree falls down may mean quicker action if it punctured the roof, or they may have noticed a tree about to fall down and done something about it. Someone living there may prevent a dangerous condition on the sidewalk causing someone to fall etc.

Makes sense to me.

BUT, going ahead with a rehab increases the risk tremendously as you’ll have:

  • Expensive tools and equipment lying around.
  • New appliances delivered and not connected.

In which case “builder’s risk” would be the right vehicle.

Beleive me, my wife the banker can be a pain, and she researches issues to the nth degree, and sometimes this allows her to properly question experts, and we often find experts take the lazy way out.

Frank Chin

Re: ANOTHER insurance lesson learned - Posted by Jack

Posted by Jack on May 30, 2006 at 22:00:27:

A landlord in trouble is much more likely to burn down his vacant rental property than his occupied rental property. Hence the higher rates for vacant proeprties. Do I have to spell it out?

Your agent is not helping you - Posted by Clint

Posted by Clint on May 30, 2006 at 16:09:31:

You should have Builders Risk which would cover those items…


Thanks for your EDUCATED reply - Posted by Jimmy

Posted by Jimmy on May 31, 2006 at 07:55:31:

Hey Jack: I’m a dummy and you are obviously very, very, very smart. So yes, please spell it out for me.

Arson would seem to be set by one of two types of people: a person with no connection to the property, or a person with a financial interest in destroying the property. If the former, the policy will not pay, because this is vandalism. so no elevated premium for that risk factor.

if the fire was set by (or on behalf of the policy beneficiary), its jail time and no insurance pay-off.

Either way, an intentionally set fire will not pay under this policy. and since it won’t pay, the premium for the policy should be unaffected.

So, smart guy, you want to try again???

You are Right - Posted by Jimmy

Posted by Jimmy on May 31, 2006 at 08:01:07:

He is well aware that he did not do me right. Theft from a major rehab site is very predictable, and he should have put me in a BR policy. I have another major rehab underway a few blocks away, and we bound it with a BR policy yesterday.

Here’s the killer. The BR is not that expensive. $450 for my particular policy. non-refundable premium that lasts a year. Covers theft and vandalism,and it covers all the materials and tools in the lock box in front.

oh yeah, the police recovered the stolen coils (smashed) and arrested a suspect yesterday. Won’t help me, unless he happens to have some assets. I won’t hold my breath.

Re: Thanks for your EDUCATED reply - Posted by Jack

Posted by Jack on May 31, 2006 at 14:00:55:

I guess I do have to spell it out for you: The gas line to the range ‘developes a leak’ and a spark causes the house to catch on fire. Arson has to be proven, some people would be willing to take the chance that arson could not be proven in such a cirsumstance, no doubt some people even get away with it.