May 18, 2026 • 36 mins
You set up the LLC.
You bought the rental property.
You got insurance.
So you’re protected… right?
Maybe not.
In this episode of Insurance Gone Wild, Dennis and Stephanie welcome investment property insurance specialist Todd Burnell to break down one of the biggest mistakes real estate investors make:
👉 Your insurance policy might not actually match your property ownership.
And if the deed, LLC, and policy aren’t structured correctly?
A lawsuit could expose way more than just the property.
Todd explains:
Why the phrase “the policy should follow the deed” matters
How improperly structured LLCs can destroy your liability protection
The difference between short-term and long-term rental risks
Why some major insurance carriers can’t properly insure LLC-owned homes
How investors are saving thousands by restructuring their coverage
And why bundling multiple rental homes under one commercial policy can completely change the game
The episode also dives into vacant property risks, renovations, water damage exclusions, umbrella policies, and how lowering insurance costs can actually help investors scale faster.
If you own investment property—or plan to—this is the kind of episode you listen to before something goes wrong.
⏱️ Chapters
00:00 – Welcome Back & Meet Todd Burnell
00:02:04 – The Insurance Problems Property Investors Don’t See
00:07:48 – “What’s the Name of the LLC?”
00:10:30 – Why the Policy MUST Match the Deed
00:14:21 – Property Damage vs. Lawsuit Exposure
00:18:01 – How LLCs Actually Protect Your Assets
00:21:44 – Short-Term Rentals = Bigger Risks
00:24:25 – The One Policy Strategy Saving Investors Thousands
00:26:35 – Renovations, Vacant Homes & Coverage Gaps
00:29:15 – The Hidden Risk After 60 Days Vacant
00:30:29 – The 80% Coverage Strategy Explained
00:31:47 – Lower Premiums Can Help You Scale Faster
00:35:21 – Final Advice for Property Investors & Landlords
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Dennis (00:06):
Welcome to another episode of Insurance Gone Wild.
I'm your host, DennisSettlemeyer, and with my lovely
cohost, Devereaux. And her owner
Stephanie (00:16):
Stephanie Lencioni.
Dennis (00:17):
Stephanie Lencioni. Devereaux is our unofficial or
maybe official mascot.
Stephanie (00:23):
Official.
Dennis (00:23):
She's official. Official.
Stephanie (00:25):
Look at this girl.
Dennis (00:26):
So, anyway well, it's Tuesday. We haven't been
together for a while.
Stephanie (00:32):
We haven't.
Dennis (00:33):
Two or three weeks now.
Stephanie (00:35):
I've missed you. Same. Same.
Dennis (00:39):
I've I've Same. Missed me too. I I lost my mind about
three and a half weeks ago. Soit has been a crazy ride, but
you've actually took a littletime off. Good for you.
Stephanie (00:49):
Thank you.
Dennis (00:51):
Nice nice beautiful place. So Yeah. Here in The US,
not abroad. You would like to goback?
Stephanie (00:58):
I would.
Dennis (00:58):
Yeah. It's nice. Yeah. It's beautiful there. Pictures
that you sent are good.
But any case, we, have aspecialized topic today.
Stephanie (01:10):
We do with a
Dennis (01:11):
special guest. A specialized guest, special k,
special ed guest.
Stephanie (01:16):
There's definitely special in there.
Dennis (01:18):
Yes. Yeah. So today, we have with us, Todd Burnell, who
is one of our producers at ourinsurance agency. It means he's
one of our, lack of better term,sales guys. We prefer to call
them advisers.
But, anyway, we're gonna talkhe's gonna share with us a
(01:41):
little bit of information thatwe for a sort of a niche that we
have working with folks thathave, investment properties,
whether it be short termrentals, long term rentals, or
other types of investmentproperties that are out there.
Some things to consider, somethings to be aware of if you are
(02:01):
an investor thinking aboutgetting into it. These are some
things that we would talk to youabout. But we've also
discovered, which we'll talk alittle more in detail about,
people that have been investorsthat have a number of homes
don't really understand how theinsurance works or how it could
work or how it should work. Yep.
And so we've we've spoken topeople who've had investment
(02:23):
properties for ten, twentyyears, and they had no idea that
their policies were needed someupdating, let's say. So, you
know, I think what are what aresome things as you talk to
people as you're learning talk?Well, maybe tell maybe, first of
all, tell us just a little bitabout yourself. It doesn't have
to be long. Let's do the churchthing where you stand up,
(02:45):
everybody stares at you.
No. I'm teasing. Just tell us alittle bit of your background,
how long in you've you've beenaround
Stephanie (02:52):
things like that. Second clock, Paul? I'm just
kidding.
Todd (02:55):
No. Well, I was born in Oklahoma, but I tried to leave
that behind me. Yeah. No. I'vebeen in corporate America.
Worked for Staples, Office Depotfor years. Uh-huh. During COVID.
I've changed a lot of things.And, Dennis, I knew you for
twenty years before that and yourun through insurance.
And I we started talking andcame over with you to take care
(03:20):
of PNC. And as I did that, itjust, to me, wasn't my passion.
And somewhere in there fouryears ago, we were up in Broken
Bow, Southeast Oklahoma. LivedAnd in Oklahoma, never knew that
part of the state existed. Andanyway, Airbnbs all over the
place and started just thinkingand looking in that market and
(03:42):
all the rental market here inTexas.
And I'd have somebody call me upand say, hey, I got three
rentals. I need to insure them.So I just go do the three
rentals and move back towhatever else I was working on,
whether it was home, auto orcommercial and, didn't, some of
them didn't seem to be set upright. You know, well, I've got
an LLC. Okay, you're with acarrier that doesn't write LLCs.
(04:05):
How are you doing that? And justkind of I'd set it up right and
just move on. Didn't reallythink about it further than
that. And really, over the lastprobably year, two years, I
started seeing so many peoplethat are, for whatever reason,
didn't have the income to getinto a house. Man, they're
renting.
And there seems to be more andmore of that going on. And
(04:26):
people my age older are movingout of their homes Selling it,
to it. And maybe they're notselling it. They're putting it
as an income property. Andyou've taught me my biggest
thing is how do I protect mycustomers' asset protection.
And I'd see stuff not writtencorrectly. And I'm like, you've
got a lot of exposure here ifyou've got two, three, five
houses. I mean, you may have a2,000,000 of investments that
(04:48):
you've built up over all thoseyears, and it's not done
correctly. And so that's where Ihave really started focusing my
time. And I think there's toomuch opportunity out there, and
we're able to ride in a lot ofdifferent states.
So that opens up even moredoors. And then just talking to
people about helping themunderstand what they don't know
so they can make, to me, wiserdecisions to be covered
(05:11):
correctly. And it doesn't meanit's more expensive. It's just
certain carriers do certainthings and certain carriers
don't. And, and a lot of times,my counterparts with other
agencies or if I'm a captiveagent, they don't talk about
certain things.
They just, oh, yeah. It'scovered. And I'm looking at the
policy. And I'm like, no. Youdidn't set this up correctly.
(05:34):
So Mhmm. Anyway, that's my.Sorry, that was forty five
seconds.
Stephanie (05:37):
So what I was gonna say, and you kind of touched on
it earlier, Dennis, and thenTodd, you talked about it with
counterparts, whether they'recaptive or whatever agents, but
you've got these people who havehad investment properties for
ten, fifteen, twenty yearsmaybe, and they don't know that
they're covered completelyincorrectly. And that's also
because I I feel like the mainreason well, there's two things
(05:58):
either. One, they don't care.Right? And then that's not our
client.
Or two, they're within the agentthat just it's so different.
Like, that's another part ofinsurance that is just it's a
niche market. There are lots oflittle complex things and
nuances within those policiesthat as just a regular agent
doing home and auto, you're nottaught. So you either go and dig
(06:22):
deeper to find the answer or youjust write it and then hope to
hell that nobody has a claim.Right?
So so that's not knocking theother agents, but it is, but
it's not. But I guess the pointis as a consumer, you wanna go
out there. If you have somethingthat is just not a
straightforward, I own a home, Ineed homeowners insurance, and
(06:43):
it's something a little bitdifferent, Make sure you're
dealing with an agent whoactually knows the market
specifically for what you'retrying to accomplish.
Dennis (06:51):
Yeah. There's stuff that there's markets that we don't go
into because we just we don't wedon't know the different. Yeah.
We just don't know thosemarkets.
Stephanie (06:57):
Even within Texas, going down the Houston area and
Corpus Christi and the The Gulf,you're dealing with a totally
different market. Like, becauseyou're dealing with hurricanes
and all of the different it'sdifferent. So go to the agent
who knows Yeah. What you'relooking for. That's my my
soapbox.
Alright. Anyway, go
Dennis (07:15):
ahead, sir. No. No. You you I think that's a great
point. The the question that wewould have is, as you're talking
to people about these things,what are some give me maybe
let's just start with it.
What is the the top thing or oneof the top two things that you
run into that people don't knowor they have questions about
(07:39):
that, like, they knowsomething's not quite ripe. They
can't put their finger give giveus give us something here that
when you talk to these folksthat own these multiple
properties.
Todd (07:48):
So my first question, and to me, it's the most paramount
one is, what's the name of theLLC? Uh-huh. Well, do I need
one? Okay. And then my secondquestion is you have the LLC.
I'm looking up the properties inthe tax on the tax rolls through
the appraisal district, and it'sstill in the name of the
individual. I'm like, Okay. AndI'm like, why is that important?
(08:12):
From a lawsuit, somebody getshurt on that property. The LLC
becomes the named insured.
So that is who if there's alawsuit, that's what keeps their
personal assets separate fromthat house in that event. If
it's all structured correctly.Sure. CPA is doing everything
right and you're keeping yourfunds separated. Mhmm.
That's the key to that. So ifall that's going on, but you
(08:33):
have the insurance in the nameof the husband and wife and not
the LLC. It could be open. Youare open. Because whenever they
have a suit and they bring suitagainst the LLC because that's
who they're paying the rents to,the insurance company's like,
who's the LLC?
That's not a named insurer. Sowhat I'll see is carriers that
(08:53):
can't write an LLC. And a lot ofyour your big carriers that
you're very familiar with Goodadvertise on TV. Advertise on
TV. Uh-huh.
They can't write LLCs. So whatdo they do? The agent, because
they're hungry and they wannakeep the business. Whether they
do, they put it under as anadditional interest, or they
just don't put it on at all.Mhmm.
And they're it's all covered.Well, it's not. Mhmm. That's why
(09:15):
you set up the LLC is forprotection.
Stephanie (09:18):
It's getting creative in the wrong way.
Dennis (09:20):
Yeah. We've talked about this.
Stephanie (09:21):
Yeah. Nope. I need you to learn to keep it up, sir.
Dennis (09:25):
Sure.
Stephanie (09:26):
Jeezy Pete.
Dennis (09:28):
Maybe that pill. Anyway, yeah, because I forgot what I
was gonna say. I gotsidetracked.
Stephanie (09:34):
Well, you know, that can throw anybody's game
Dennis (09:36):
off. The look at disappointment in your eyes when
it fell down to my chest.
Stephanie (09:41):
Well, that got a little cocky there, didn't it?
Yeah. Anyway
Dennis (09:44):
What was I gonna say? No.
Stephanie (09:47):
We're talking about LLC and writing it.
Dennis (09:49):
Yeah. So, yes. We've talked about that you and I have
had long conversations aboutthis about when a home is deeded
in an LLC Yes. Or deeded in thename of the individual, the
policy should follow the deed.Because if it's deeded in an LLC
(10:11):
and the policy is in an LLC andthere is a lawsuit and the
individual is named in thelawsuit, which they're going to
be, Yep.
There's gonna be coverage fromthe LLC policy to cover the
individual because the LLCautomatic the LLC itself
automatically covers theindividual. But if it's the
other way around
Todd (10:32):
Now you have.
Dennis (10:32):
Now you have a problem. Now because if you'd see if the
if the if it's deeded in LLC,but you just mentioned this, but
the policy is written in thename of the individual, then
you're gonna have a problembecause now the insurance
companies, they're they're gonnathey're gonna get this lawsuit
against the individual. Correct.And they're gonna be like, well
(10:55):
and all this will come outduring discovery.
Todd (10:58):
Yes.
Dennis (10:58):
If you ever been sued, you know what discovery is.
That's when you have to sitthere and answer a ton of
questions by opposing counselabout different thing or even
your counsel. There's a it's adiscovery process. What was
going on? The insurance oh, waita minute.
That policy who's this LLC? Yep.That's what the insurance
(11:21):
company is going to say. Wedon't know the LLC. They're not
an insured on this.
So Yes. Guess what, individual?You're on your own. Because we
don't have insurance on this.There's no coverage for the LLC.
And be and the thing is, it goesback you even asked the
question, does it matter if it'san LLC, or does it matter if it
(11:44):
just in general, if it's in thename of an individual that let's
just say the deed. Does itmatter? Yeah. Well, we can't
answer that. We can give you our2¢ that it's better of putting
it into an LLC, but youraccountant or lawyer may tell
you something different.
But you usually use an LLC fortwo reasons. Right? It's it's
(12:05):
asset protection and tax passthrough. That's really the two
reasons why you use an LLC. Andif you don't use it properly,
then it doesn't matter how manyLLCs you have.
Yeah. If you're mixing fundswith your personal funds and
things like that, a judge isgonna go, that's not an LLC.
(12:26):
Correct. So most people don'tknow that either. That's a whole
another podcast.
Todd (12:30):
But
Dennis (12:32):
so you have found that what you're finding is that
people are their policy doesn'tmatch the deed.
Todd (12:39):
No. It's like they took the loan out when they bought
the house in their name. And nowfive years later, they're
putting it out as an investmentproperty. Sometimes, may have
trouble with the lender wantingto if they change the deed to
the LLC, the bank, depending onthe bank, can call the note.
Dennis (12:56):
They
Todd (12:57):
could. They can. So you have to be careful of that. So
it's one of those, well, if youcan't do that, then is the half
million, million dollars thatyou've got on your liability,
does that give you the comfortthat you want? Or if you've got
10,000,000 or $15,000,000 inother assets, is it worth
putting a bigger umbrella?
I mean, there's different waysto deal with some of that risk.
(13:18):
But what I run into a lot oftimes is, oh, I've got an LLC
set up. Well, they've got it setup, but they've never structured
it right. They don't have thepieces of the puzzle put in
place correctly. And it's nothard to do that.
It's just nobody asked them thequestions. That's it more than
anything. They just, oh, Okay,we'll just put it in the name of
the individual. That's theeasiest way to deal with it. And
we just move on, and it'swritten.
(13:40):
But is it written in the way toprotect the customer, the
client? That's the question.
Dennis (13:46):
I know what I was going to say also about the LLC versus
the individual. From aninsurance perspective, where
it's really going to come out isduring a lawsuit, and I I hit on
that a while ago. During alawsuit, that's when things are
really going to be exposed if ifit's written correctly or not.
Because Yes. During if it's justa physical damage to the like,
(14:09):
an a new roof or water damage orsome, chances are the claims
adjuster is not gonna go thatdeep into it to figure out who
actually owns it, you know, onthe deed.
And most and here's the thing.People that own rental homes,
they don't care at that point.What they care about, though, is
a lawsuit because that's whatcould ruin them is a lawsuit.
(14:31):
And that's when it comes out.
Stephanie (14:34):
But the physical damage would still be covered.
Right? So, I mean, if you Idon't know, I think home, but
I'm saying if you own the home
Dennis (14:41):
Who owns the home? Who's
Stephanie (14:42):
If the individuals own the home.
Dennis (14:45):
Okay.
Todd (14:46):
And
Stephanie (14:48):
somebody thinks that everything is through the LLC.
Right? But you're like, oh,well, you Todd checked the deed
thing and it's mister andmissus.
Dennis (14:56):
Okay.
Stephanie (14:57):
And then storm blows through. They're getting a
check. Well, check goes toeither Mr. And Mrs. Or if they
have in the LLC, then it goes tothe LLC.
So, like, even so at that point,it doesn't matter because either
way, they're getting the checkand they can cash the check.
Right?
Dennis (15:11):
Well, no. Well, if it's just physical damage,
Stephanie (15:15):
it's physical damage like
Dennis (15:16):
no, they're probably the adjuster is probably going to.
Okay, let me back up. We've gotto clear some things up with
your example.
Stephanie (15:22):
Okay.
Dennis (15:23):
Who owns the who owns the house? In your example, who
owns the house?
Stephanie (15:29):
Let's say LLC owns it.
Dennis (15:31):
Okay. And what is the name of the who's the name of
the what's the name of thepolicies under?
Stephanie (15:37):
Mister and missus. But mister and missus Control
LLC.
Dennis (15:43):
Mister and missus are members of an LLC.
Stephanie (15:46):
Sure. They're members of the LLC.
Todd (15:47):
They don't
Dennis (15:47):
own the LLC. They're members of the LLC. And that's
not splitting hairs. That's justa legal thing.
Stephanie (15:52):
That's fine. I'm gonna say tomato tomato for the
purpose of this, though. I letyou I'm sure you are more
correct. So members of the LLC,managing members, if you will,
mister and missus managingmembers or managing member,
whatever, doesn't matter, butthey LLC.
Dennis (16:13):
The then this case, the physical damage to the to the
house, the the check willprobably be written to the
individuals who were on the nameof the policy. I don't think
that the adjuster usually goingto go that deep to find out if
they're actually the owners willlook it up on the appraisal
district. So in all that, soyou're probably not going to
(16:33):
have an issue with that example.
Stephanie (16:34):
Okay, so that's I guess that's kind of my point,
though, is that with the it'sgoing to be it should be covered
if the insurance was there andthe coverage was there and it's
Dennis (16:42):
But it doesn't have to be, but it could be. It's
probably going to be.
Stephanie (16:45):
Yeah. And I would say most insurance companies at that
point are probably going to lookto find the coverage if you're
the insured. But I know when wewere when I was a claims
adjuster, we would have to lookup who the owner was. So let's
say it was I guess it'sdifferent because it's
liability. So it's a differentexample.
So never mind.
Dennis (17:06):
Because like Physical damage portion will probably be
be paid.
Todd (17:09):
Okay.
Dennis (17:10):
That's my gut telling me that. I think that you're gonna
run into when it becomes verylegal. And now there's a
lawsuit. I think in today'sworld, insurance companies gonna
be looking to get out of pain.
Stephanie (17:21):
Different. I'm not talking about lawsuit. I'm
talking about property damage.
Dennis (17:23):
No. No. We're talking about two different
Stephanie (17:26):
yes. You brought up property damage. I was touching
on property
Dennis (17:29):
about two different types of claims, liability
versus property.
Stephanie (17:33):
And that's why I negated. I was like, well, never
mind on that. But even withproperty damage
Todd (17:37):
Mhmm.
Stephanie (17:38):
Ice I can't
Dennis (17:41):
Probably not
Stephanie (17:41):
imagine they would make a huge when you have mister
and missus who
Dennis (17:45):
I don't think they would.
Stephanie (17:46):
Are the members of the LLC. I can't imagine that
there's an argument to not
Dennis (17:50):
have coverage. They would. But I think the insurance
company would have the right tosay no because it's not the same
ownership. Okay. So but chancesare they're not going to be that
picky about it.
Todd (18:02):
What I love is we've five, ten minutes running around this
because there's misunderstandwhen I say that, trying to
understand. So when I'm talkingto a client, this is where when
I'm talking through this, thisis where it makes sense if
you're scaling and addingproperties. What's the ideal
thing? Get your LLC set upfirst. Start moving your
(18:23):
properties when you buy them.
It's directly into the LLC soyou're not having to do a quick
claim deed or something else toflip it down the road. Because
that's the thing is people gettired. They don't procrastinate.
I don't want to deal with that.I'll get it retitled later on.
And later on doesn't happen. Andso to me, the ideal thing is if
you're buying properties oryou're wanting to scale, even if
you've just got one or two, isif you've got the LLC at the
(18:46):
beginning, that's who the loanis going to be in. They may
still look at you financially,you and your wife as far as the
house. But the house gets thebottom loan. Everything's in the
name of the LLC.
So it's all done from thebeginning correctly. Insurance
follows suit. It's going be inthe name of the LLC. So
everything is done it's it'swhen somebody's already got
pieces in play is, okay, let meunderstand all the pieces to the
(19:09):
puzzle. And now let's talk abouthow you get it correct.
Mhmm. Because at the end of theday, it's like, great. I got a
lawsuit over here at a house.Something somebody falls.
They're going I don't know.
There's a banister in astaircase that didn't do what it
needed to do. My grandmotherfell as she was going down.
Guess who's on the hook? Ipromise you somebody that has
that happen. Bannister comesloose, something, whatever it
(19:29):
is, they're coming aftersomebody.
And so then their question is,how do I protect everything else
that that homeowner has? Mhmm.That's where to me the asset is.
Did we set it all right so thatthat one event stays local to
only that home and that policy,and it doesn't jump through that
(19:50):
barrier to their personal assetsand everything else.
Stephanie (19:53):
So you just brought something else up though, that
home specifically. Right? So isthere at what what is the
scenario to where it opens it upto say, oh, well, now we can go
after everything that you have.
Todd (20:07):
Well, that's where you get above my pay grade. But if
you've got if you've got ifyou've got the LLC set up, but
they're commingling funds,they're paying for repairs to
that house out of their personalfunds rather than out of the
LLC.
Stephanie (20:20):
No. Let's say it's an LLC that has five it's got five
homes.
Todd (20:23):
Five homes. Okay.
Stephanie (20:24):
Right. So how do you stop them from going after the
entire LLC and just saying, hey.This is the one home.
Todd (20:29):
I've got investors that they some of them, they still
put them all together. I haveother ones that are like, okay.
We put a million dollars worthof homes in one LLC, and then we
set up another LLC and anotherLLC. So I see it done different
ways. Okay.
I don't have the magic answer tothat.
Dennis (20:45):
I that's when you have to get a lawyer involved. Is it
better to put them individual?Because we've seen it where it's
the address LLC. This nextaddress, like 123 Main Street
LLC.
Todd (20:57):
Right.
Dennis (20:57):
456 Main Street LLC.
Stephanie (20:59):
So just then we split with the to the one.
Dennis (21:01):
You can, and you could do it that way. It really
depends on the lawyer and whatthey're looking at as the whole
because we don't know that. Butif there's common ownership
between those, common ownership,meaning that it's the same
member or same two members, theyown everything together, then we
could we could write it all onone policy. Right? Mhmm.
(21:25):
We could write it all on onepolicy. So there's things that
we can do rather than writing abunch of different insurance
policies for all ten, fifteenhomes to stick it all on one
policy because we have commonownership.
Stephanie (21:39):
Okay. And that's a totally different thing that
we've been talking about. So doyou want to elaborate on that at
all?
Todd (21:44):
Yeah. I mean, to me, we're the you know, I have people that
have or clients that have shortterm rentals. I have some that
have long term rentals. Andwhere's the bigger exposure?
Well, if I'm just looking at itfrom a bird's eye view, I'd be
more worried about having anumbrella or making sure I've got
it more protected if I haveshort term rentals.
I have not one tenant in thereall year long learning where all
(22:07):
the switches are, they can walkthrough the house in the dark.
I've got potentially forty,fifty different families coming
in there, weekends, probablydrinking going on. There's other
stuff going on, partying, whathave you. Much higher chance of
loss, injury. So would I want anumber on somebody that's got
short term rentals?
(22:27):
Probably. There's probably goingto be a swimming pool. Just
depending on where it's located,there's going be a lot more
risk. So would I want to makesure I've either got more
coverage protecting my assetsfrom that home. Or to Dennis'
point, Okay, maybe I'vestructured the short term
rentals where I only put two orthree in one LLC.
(22:47):
Or maybe I do them allindividually. So if something
happens here, it's not to saythe attorney couldn't sit there
and go say they all have commonownership. But that attorney's
got to do a whole lot morelegwork. And are they going to
do all that? Are they going tobe more lazy?
I can't answer that question.But I'm just looking at it. How
do you protect? What are thesteps I can do that aren't going
to be huge and laborsome for myclient to protect that? And to
(23:12):
me, the biggest one is if I'vegot short term rentals, I'd
probably want at least anothermillion, maybe $2,000,000
umbrella, probably $2,000,000$3,000,000 and it covers their
entire portfolio.
That should cover just aboutanything coming. I mean, even if
somebody loses their life, Iwouldn't think that loss you'd
never know. But I'm just saying2,000,003 million dollars
umbrella, that should cover thelion's share of what could
(23:37):
happen, even loss of earningsfor that spouse if somebody got
killed or something like thatfor loss of income and so forth.
But I just run into people thatdon't really think about that.
I'm like, yeah, it's what'sgoing on inside of the house.
Swimming pools, those alwaysscare me. I'm always wanting
liability, whether it's ahomeowner or otherwise. I'm
like, you don't know
Dennis (23:54):
who's Well, even hot tubs, got slipping
Todd (23:56):
through Yeah, the yeah. So it's just being mindful of what
those risks are and how do Imitigate for that? And then kind
of going the second directionaround that when you were
talking about, do I set up adifferent LLC for every one of
them? Probably the biggest thingwhen I talk with investors, if
they're scaling I mean,somebody's got more than five
(24:17):
properties, we've got somecommercial products. And this is
probably one the things I lovethe most is I don't know, let's
say somebody's got sevenproperties.
Doesn't sound like a whole lot.But in the insurance world,
anytime I'm doing a renewal, Idon't care if it's a car, home,
or whatever, I'm going to talkto that person three times
probably over just that onepolicy. I'm going call them to
let them know, we're looking atyour policy. Have there been any
(24:39):
changes? Then I'm going back andlooking through all of our
carriers to run a quote,bringing that back to them.
Then if we're looking atanything else that we need to
change, I'm gonna talk to thatcustomer probably three times on
one policy. I've got sevenhomes. I'm touching I'm telling
that customer 21 times a year totalk about those properties.
Then I still have their home,their auto, their personal
(25:01):
umbrella, and whatever elsethey've got. I'm like, I would
hate to talk to me 25, 30 timesa month
Dennis (25:08):
Boy, or a year. I'm telling you, one day is tough.
Todd (25:11):
Yeah. So Yeah. Yeah. But so who wants to have to deal
with that? And so we havecarriers that I can put all
seven homes, one policy wheneverwe bring it together.
Dennis (25:22):
And we ran into that. I I think I know what you're
thinking of. You're thinking ofthe one we that you that you ran
into just recently where theyhad they had we had one of the
rental homes. They had sevenmore. Yeah.
And you came in and with aparticular program we have,
saved them $1,112,000 dollars ayear on overall, gave them
(25:43):
better coverage. And now one ofbut the selling point wasn't
even the premium. The sellingpoint, she's like the wife was
like, you mean you could put allthese on one policy? You don't
have to deal with it once.Todd's like, yeah.
She's like, really? Yeah. And itwasn't even about the money. It
was just about the time that shespends tracking these things.
(26:05):
Now she has to worry about itonce a year.
Stephanie (26:07):
Right.
Todd (26:08):
Yeah. And you you know, she's asking me, it's like, what
happens if I buy another house?I'm like, because we made it
easy? She's like, yeah. I'mlike, okay.
So we put this in place.September, you buy another
house. We add it on for whateverremaining months. Same policy we
just add in. If it's six months,we add in six months premium,
and we roll on down the road.
Dennis (26:26):
Here's a question for you. I already know the answer,
but I'm gonna ask you. Okay. Saythey buy a house, but this gotta
have some work done on it. Canthey put it on that same policy?
Todd (26:35):
If they are, yes. As long as two things don't happen. As
long as they're not changing thesquare footage
Dennis (26:42):
Mhmm.
Todd (26:42):
And we're not looting moving load bearing walls. Mhmm.
Those are the two that so
Dennis (26:46):
So it could be vacant and be renovated.
Todd (26:48):
Yes. And it can go up under as a renter's policy or a
landlord policy versus having todo it as either a vacant
dwelling or a builder's risk. Soyou may sell one builder's risk
because if they've got, I don'tknow, two or three pallets of
wood outside, you got airconditioning that hadn't been
installed, you may so wantbuilders risk just in case that
stuff grows legs and walks awayat night. But as far as the
(27:12):
structure itself, yeah, youdon't need to do a vacant
dwelling policy. You just set itup as the landlord policy, and
it just moves on down the road.
And so that's one of the nicethings. Not getting off into the
weeds, but one of the biggestthings is water coverage is
covered under that. Theft, allof
Dennis (27:28):
that Yeah, let go on with that, is that water
coverage for a lot of thosetypes of policies is excluded.
So is vandalism and maliciousmischief is excluded. This
policy that we're specificallytalking about right now covers I
(27:49):
don't know if it covers VMM, butit certainly covers water.
Todd (27:51):
It covers VMM? It does as long as there's work being done
on the house, which it's gonnabe if they're doing a if they're
doing a if they're buying anddistressed and they're
rebuilding, or renovating, yes,it's got contractors in there.
That timeline never stops. Soonce they're finished, if nobody
moves in within sixty days, thenyes, it would fall to it would
(28:13):
still be up under the landlordpolicy because the intent is
still to rent it out. Mhmm.
But, yes, you would losecoverage for theft and malicious
loss on that side of it. Mhmm.But chances are they're gonna
have it rented in sixty days.But the nice thing is I'm
staying
Dennis (28:28):
of Yeah.
Todd (28:29):
I'm staying abreast of that. So we're having those
conversations before we get tothat place. And that's probably
the biggest thing is people thatdon't sell this stuff all day
long or they're not in it, theydon't know where those timelines
are for their client. Clientdoesn't have a clue that, oh, I
haven't rented it out in seventyfive days, three months.
Dennis (28:47):
Oh, most companies, no coverage if the adjuster finds
that out. But
Todd (28:52):
the client wouldn't know that. Most of the time, don't
know that and what's going on.And I'm like, well, this is
where I live. I understand theimportance of that. So when
you've got it renovated, myfirst question is, Okay, we've
got till September 15 orwhatever that sixty day mark is.
I've got it on my Outlook. Whatam I doing? I'm calling them
before that date saying, have wegot it rented? If we don't, then
(29:13):
we need to adjust it a differentway. Yeah.
Dennis (29:15):
Need to Does it change the premium if we flip it? Flip
the switch on the type ofcoverage it needs?
Todd (29:20):
No. If it goes back I mean, if it goes vacant
dwelling, no, nothing changes onthe cost. The coverage goes
down. Why
Dennis (29:27):
is The coverage has changed, but not the premium.
Todd (29:29):
So why is that important to my client? You may to go out
there every day or two and checkit because if you have a water
loss or something else going on,you are the one person that can
tell me something's happened sowe can deal with it once we get
past that sixty day mark. Soit's just making the client
aware of what's going on. Andthat's probably the biggest one
(29:51):
on that side of it. The otherthing is I have clients who are
like, well, if I want the costto go if I'm looking for ways to
bring down my cost, well, if youown the properties outright or
you've got equity in them, Idon't have to insure at 100% to
value.
Because the policies we'retalking about, if you've got
more than five properties on thecarriers that will write the
(30:15):
single policy with multiplehomes, it's commercial. It's a
commercial policy in certainaspects. So in the commercial
world, you can insure at 80% tovalue. So if I have a $400,000
home, I can insure that at$3.20. $3.20.
Well, insurance on $3.20 is lessthan 400. Granted, if the whole
home was 100% loss, I'm onlygoing to get $3.20 out of it
(30:39):
because that's what they'regoing to pay. But the odds that
there's not going to besomething less of the home, even
if the whole thing burns, you'restill going to have the frame.
You've the pad. You've still gotdepending on what the damage is
to it, we're not having to putback 100% of that.
But I'm not going to tell you itcan't happen. But the reality is
it's probably not going to be100% loss.
Dennis (30:56):
Well, here's something that you may or may not
remember. In most of the citiesaround, at least DFW Mhmm. If
you have 5051% damage to a home,the fire chief or whoever it is
Mhmm. Can say, no. We gotta tearit down and rebuild it.
Todd (31:21):
Right.
Dennis (31:22):
So so I think that would be something that But the the
fact of the matter is it couldit would still be classified as
a total loss. Yeah. Right?
Todd (31:32):
And it's it's I mean, it's risk it's risk mitigation from
the client. If they're like,okay. I'll I'll take that risk
because it may save me anotherif I've got seven, eight, 10
properties, and it saves meanother 10,000 in premium to
bring that down to 80%. Mhmm.But that gives me enough cash
flow to go out and buy two moreproperties.
Dennis (31:47):
Yeah. We're gonna be I wanted to talk about that. Yeah.
So the idea of saving money,especially for folks that are
trying to scale Mhmm. Whetherthey've got five and trying to
get to 10 is we know I think youtalked to a guy today, and you
mentioned I'd ask you, did youmention to him about ratios and
stuff like that?
(32:07):
I And forgot what the answer wasbecause I was dealing with, you
know, all the stuff I've beendealing with. But but in order
to get loans, sometimes theyhave to hit certain ratios,
income to expenses or thingslike that. Well, now if they
drop their premium, if they everlower their premium, even more
and maybe get lucky within thisparticular case, with this one
(32:30):
program we're talking about, andget better coverage than most
that we see, win win. So nowthey save a $100 per home Right.
A month per they save a $100 permonth per home.
That's $1,200 per home per year,and they've got six homes.
That's $7,200, that could changethe ratio enough for them to
(32:50):
qualify for the that next hometo get it into some sort of
loan. And because ourunderstanding of how this market
works is these investors aren'tlooking to make money off of the
home right now. They're lookingjust to make sure it pays for
itself. They're gonna make theirmoney when the home sells.
(33:11):
Right?
Todd (33:12):
I mean, they may wanna hopefully take money away from
it every month so they're savingso that they can pay for future
repairs or what have you. Butlike the lady that I just got
through finishing with, she was$712 a year. I'm like, that's a
half of a roof every year.That's an air conditioner for
each I mean, for her, it wasenough money. It's like, okay,
(33:32):
now I've got a windfall overhere if I want to start doing
some other things to theproperties or just sock it away
that it becomes a big number.
Maybe it was only $100 $150 perproperty. But when you start
taking that time, just sevenproperties times twelve months,
yes. It start it became a muchPer month. Yeah.
Stephanie (33:51):
I think a lot of people would kill to save $150
per month Yeah.
Todd (33:56):
Well on
Stephanie (33:57):
anything. Right?
Todd (33:58):
Well, and to me, the bigger thing is if you're trying
to keep your clients in there oryour customer, your renter, if
you don't have to go back andraise rents every year because,
wow, there was a big enoughOkay, dollars 150 a month on
insurance for that one property.If you keep them in there and
they don't have to go someplaceelse, one, now you're not having
(34:19):
to go back in, get it cleanedup, get it ready to rent again.
You're keeping that customer inthere another year. So there's I
mean, to me, it's a win win. Imean, I talked to some of our
customers that are renters.
And I'm like, might be worth youputting my name out to your
landlord because if I can helpsave them from having to come
back and raise your rents. Imean, the only reason that
(34:42):
landlords are raising rents arebecause, okay, my taxes, my
insurance, my HOA fees, they'regoing up. Yep. You know? Yeah.
And so if you can help curb someof that. So
Dennis (34:54):
Yeah. I mean, it's helpful. It's it's a great
program that we have. We havemultiple programs like this, but
one particular that he's talkingabout has been very kind to
investors. And so but we do havetwo other ones that do some
similar stuff.
They just don't have quite asmany bells and whistles, but for
(35:16):
some clients, they're a betterfit. The thing is we just have
to look and see what you have.We've got to wrap it up, but we
appreciate you coming in and andtalking about this. And so if
anybody out there has investmenthomes and are looking to scale,
we would love to give you acall. You can give us a call at
(35:37):
833505 quote.
That's like 7868, something likethat, quote. 83833505, or you
can email us atcontact@igwpodcast.com.
Contact@igwpodcast.com. We'dlove to talk with you, see if
(36:00):
there's anything that we mightbe able to help with if you're
an investor. And we are in anumber of different states.
And so if you have stuff spreadout, it's something we can also
look at. Anyway, we appreciateit, and we'll talk to you again.
Welcome to another episode of Insurance Gone Wild.
I'm your host, DennisSettlemeyer, and with my lovely
cohost, Devereaux. And her owner
Stephanie (00:16):
Stephanie Lencioni.
Dennis (00:17):
Stephanie Lencioni. Devereaux is our unofficial or
maybe official mascot.
Stephanie (00:23):
Official.
Dennis (00:23):
She's official. Official.
Stephanie (00:25):
Look at this girl.
Dennis (00:26):
So, anyway well, it's Tuesday. We haven't been
together for a while.
Stephanie (00:32):
We haven't.
Dennis (00:33):
Two or three weeks now.
Stephanie (00:35):
I've missed you. Same. Same.
Dennis (00:39):
I've I've Same. Missed me too. I I lost my mind about
three and a half weeks ago. Soit has been a crazy ride, but
you've actually took a littletime off. Good for you.
Stephanie (00:49):
Thank you.
Dennis (00:51):
Nice nice beautiful place. So Yeah. Here in The US,
not abroad. You would like to goback?
Stephanie (00:58):
I would.
Dennis (00:58):
Yeah. It's nice. Yeah. It's beautiful there. Pictures
that you sent are good.
But any case, we, have aspecialized topic today.
Stephanie (01:10):
We do with a
Dennis (01:11):
special guest. A specialized guest, special k,
special ed guest.
Stephanie (01:16):
There's definitely special in there.
Dennis (01:18):
Yes. Yeah. So today, we have with us, Todd Burnell, who
is one of our producers at ourinsurance agency. It means he's
one of our, lack of better term,sales guys. We prefer to call
them advisers.
But, anyway, we're gonna talkhe's gonna share with us a
(01:41):
little bit of information thatwe for a sort of a niche that we
have working with folks thathave, investment properties,
whether it be short termrentals, long term rentals, or
other types of investmentproperties that are out there.
Some things to consider, somethings to be aware of if you are
(02:01):
an investor thinking aboutgetting into it. These are some
things that we would talk to youabout. But we've also
discovered, which we'll talk alittle more in detail about,
people that have been investorsthat have a number of homes
don't really understand how theinsurance works or how it could
work or how it should work. Yep.
And so we've we've spoken topeople who've had investment
(02:23):
properties for ten, twentyyears, and they had no idea that
their policies were needed someupdating, let's say. So, you
know, I think what are what aresome things as you talk to
people as you're learning talk?Well, maybe tell maybe, first of
all, tell us just a little bitabout yourself. It doesn't have
to be long. Let's do the churchthing where you stand up,
(02:45):
everybody stares at you.
No. I'm teasing. Just tell us alittle bit of your background,
how long in you've you've beenaround
Stephanie (02:52):
things like that. Second clock, Paul? I'm just
kidding.
Todd (02:55):
No. Well, I was born in Oklahoma, but I tried to leave
that behind me. Yeah. No. I'vebeen in corporate America.
Worked for Staples, Office Depotfor years. Uh-huh. During COVID.
I've changed a lot of things.And, Dennis, I knew you for
twenty years before that and yourun through insurance.
And I we started talking andcame over with you to take care
(03:20):
of PNC. And as I did that, itjust, to me, wasn't my passion.
And somewhere in there fouryears ago, we were up in Broken
Bow, Southeast Oklahoma. LivedAnd in Oklahoma, never knew that
part of the state existed. Andanyway, Airbnbs all over the
place and started just thinkingand looking in that market and
(03:42):
all the rental market here inTexas.
And I'd have somebody call me upand say, hey, I got three
rentals. I need to insure them.So I just go do the three
rentals and move back towhatever else I was working on,
whether it was home, auto orcommercial and, didn't, some of
them didn't seem to be set upright. You know, well, I've got
an LLC. Okay, you're with acarrier that doesn't write LLCs.
(04:05):
How are you doing that? And justkind of I'd set it up right and
just move on. Didn't reallythink about it further than
that. And really, over the lastprobably year, two years, I
started seeing so many peoplethat are, for whatever reason,
didn't have the income to getinto a house. Man, they're
renting.
And there seems to be more andmore of that going on. And
(04:26):
people my age older are movingout of their homes Selling it,
to it. And maybe they're notselling it. They're putting it
as an income property. Andyou've taught me my biggest
thing is how do I protect mycustomers' asset protection.
And I'd see stuff not writtencorrectly. And I'm like, you've
got a lot of exposure here ifyou've got two, three, five
houses. I mean, you may have a2,000,000 of investments that
(04:48):
you've built up over all thoseyears, and it's not done
correctly. And so that's where Ihave really started focusing my
time. And I think there's toomuch opportunity out there, and
we're able to ride in a lot ofdifferent states.
So that opens up even moredoors. And then just talking to
people about helping themunderstand what they don't know
so they can make, to me, wiserdecisions to be covered
(05:11):
correctly. And it doesn't meanit's more expensive. It's just
certain carriers do certainthings and certain carriers
don't. And, and a lot of times,my counterparts with other
agencies or if I'm a captiveagent, they don't talk about
certain things.
They just, oh, yeah. It'scovered. And I'm looking at the
policy. And I'm like, no. Youdidn't set this up correctly.
(05:34):
So Mhmm. Anyway, that's my.Sorry, that was forty five
seconds.
Stephanie (05:37):
So what I was gonna say, and you kind of touched on
it earlier, Dennis, and thenTodd, you talked about it with
counterparts, whether they'recaptive or whatever agents, but
you've got these people who havehad investment properties for
ten, fifteen, twenty yearsmaybe, and they don't know that
they're covered completelyincorrectly. And that's also
because I I feel like the mainreason well, there's two things
(05:58):
either. One, they don't care.Right? And then that's not our
client.
Or two, they're within the agentthat just it's so different.
Like, that's another part ofinsurance that is just it's a
niche market. There are lots oflittle complex things and
nuances within those policiesthat as just a regular agent
doing home and auto, you're nottaught. So you either go and dig
(06:22):
deeper to find the answer or youjust write it and then hope to
hell that nobody has a claim.Right?
So so that's not knocking theother agents, but it is, but
it's not. But I guess the pointis as a consumer, you wanna go
out there. If you have somethingthat is just not a
straightforward, I own a home, Ineed homeowners insurance, and
(06:43):
it's something a little bitdifferent, Make sure you're
dealing with an agent whoactually knows the market
specifically for what you'retrying to accomplish.
Dennis (06:51):
Yeah. There's stuff that there's markets that we don't go
into because we just we don't wedon't know the different. Yeah.
We just don't know thosemarkets.
Stephanie (06:57):
Even within Texas, going down the Houston area and
Corpus Christi and the The Gulf,you're dealing with a totally
different market. Like, becauseyou're dealing with hurricanes
and all of the different it'sdifferent. So go to the agent
who knows Yeah. What you'relooking for. That's my my
soapbox.
Alright. Anyway, go
Dennis (07:15):
ahead, sir. No. No. You you I think that's a great
point. The the question that wewould have is, as you're talking
to people about these things,what are some give me maybe
let's just start with it.
What is the the top thing or oneof the top two things that you
run into that people don't knowor they have questions about
(07:39):
that, like, they knowsomething's not quite ripe. They
can't put their finger give giveus give us something here that
when you talk to these folksthat own these multiple
properties.
Todd (07:48):
So my first question, and to me, it's the most paramount
one is, what's the name of theLLC? Uh-huh. Well, do I need
one? Okay. And then my secondquestion is you have the LLC.
I'm looking up the properties inthe tax on the tax rolls through
the appraisal district, and it'sstill in the name of the
individual. I'm like, Okay. AndI'm like, why is that important?
(08:12):
From a lawsuit, somebody getshurt on that property. The LLC
becomes the named insured.
So that is who if there's alawsuit, that's what keeps their
personal assets separate fromthat house in that event. If
it's all structured correctly.Sure. CPA is doing everything
right and you're keeping yourfunds separated. Mhmm.
That's the key to that. So ifall that's going on, but you
(08:33):
have the insurance in the nameof the husband and wife and not
the LLC. It could be open. Youare open. Because whenever they
have a suit and they bring suitagainst the LLC because that's
who they're paying the rents to,the insurance company's like,
who's the LLC?
That's not a named insurer. Sowhat I'll see is carriers that
(08:53):
can't write an LLC. And a lot ofyour your big carriers that
you're very familiar with Goodadvertise on TV. Advertise on
TV. Uh-huh.
They can't write LLCs. So whatdo they do? The agent, because
they're hungry and they wannakeep the business. Whether they
do, they put it under as anadditional interest, or they
just don't put it on at all.Mhmm.
And they're it's all covered.Well, it's not. Mhmm. That's why
(09:15):
you set up the LLC is forprotection.
Stephanie (09:18):
It's getting creative in the wrong way.
Dennis (09:20):
Yeah. We've talked about this.
Stephanie (09:21):
Yeah. Nope. I need you to learn to keep it up, sir.
Dennis (09:25):
Sure.
Stephanie (09:26):
Jeezy Pete.
Dennis (09:28):
Maybe that pill. Anyway, yeah, because I forgot what I
was gonna say. I gotsidetracked.
Stephanie (09:34):
Well, you know, that can throw anybody's game
Dennis (09:36):
off. The look at disappointment in your eyes when
it fell down to my chest.
Stephanie (09:41):
Well, that got a little cocky there, didn't it?
Yeah. Anyway
Dennis (09:44):
What was I gonna say? No.
Stephanie (09:47):
We're talking about LLC and writing it.
Dennis (09:49):
Yeah. So, yes. We've talked about that you and I have
had long conversations aboutthis about when a home is deeded
in an LLC Yes. Or deeded in thename of the individual, the
policy should follow the deed.Because if it's deeded in an LLC
(10:11):
and the policy is in an LLC andthere is a lawsuit and the
individual is named in thelawsuit, which they're going to
be, Yep.
There's gonna be coverage fromthe LLC policy to cover the
individual because the LLCautomatic the LLC itself
automatically covers theindividual. But if it's the
other way around
Todd (10:32):
Now you have.
Dennis (10:32):
Now you have a problem. Now because if you'd see if the
if the if it's deeded in LLC,but you just mentioned this, but
the policy is written in thename of the individual, then
you're gonna have a problembecause now the insurance
companies, they're they're gonnathey're gonna get this lawsuit
against the individual. Correct.And they're gonna be like, well
(10:55):
and all this will come outduring discovery.
Todd (10:58):
Yes.
Dennis (10:58):
If you ever been sued, you know what discovery is.
That's when you have to sitthere and answer a ton of
questions by opposing counselabout different thing or even
your counsel. There's a it's adiscovery process. What was
going on? The insurance oh, waita minute.
That policy who's this LLC? Yep.That's what the insurance
(11:21):
company is going to say. Wedon't know the LLC. They're not
an insured on this.
So Yes. Guess what, individual?You're on your own. Because we
don't have insurance on this.There's no coverage for the LLC.
And be and the thing is, it goesback you even asked the
question, does it matter if it'san LLC, or does it matter if it
(11:44):
just in general, if it's in thename of an individual that let's
just say the deed. Does itmatter? Yeah. Well, we can't
answer that. We can give you our2¢ that it's better of putting
it into an LLC, but youraccountant or lawyer may tell
you something different.
But you usually use an LLC fortwo reasons. Right? It's it's
(12:05):
asset protection and tax passthrough. That's really the two
reasons why you use an LLC. Andif you don't use it properly,
then it doesn't matter how manyLLCs you have.
Yeah. If you're mixing fundswith your personal funds and
things like that, a judge isgonna go, that's not an LLC.
(12:26):
Correct. So most people don'tknow that either. That's a whole
another podcast.
Todd (12:30):
But
Dennis (12:32):
so you have found that what you're finding is that
people are their policy doesn'tmatch the deed.
Todd (12:39):
No. It's like they took the loan out when they bought
the house in their name. And nowfive years later, they're
putting it out as an investmentproperty. Sometimes, may have
trouble with the lender wantingto if they change the deed to
the LLC, the bank, depending onthe bank, can call the note.
Dennis (12:56):
They
Todd (12:57):
could. They can. So you have to be careful of that. So
it's one of those, well, if youcan't do that, then is the half
million, million dollars thatyou've got on your liability,
does that give you the comfortthat you want? Or if you've got
10,000,000 or $15,000,000 inother assets, is it worth
putting a bigger umbrella?
I mean, there's different waysto deal with some of that risk.
(13:18):
But what I run into a lot oftimes is, oh, I've got an LLC
set up. Well, they've got it setup, but they've never structured
it right. They don't have thepieces of the puzzle put in
place correctly. And it's nothard to do that.
It's just nobody asked them thequestions. That's it more than
anything. They just, oh, Okay,we'll just put it in the name of
the individual. That's theeasiest way to deal with it. And
we just move on, and it'swritten.
(13:40):
But is it written in the way toprotect the customer, the
client? That's the question.
Dennis (13:46):
I know what I was going to say also about the LLC versus
the individual. From aninsurance perspective, where
it's really going to come out isduring a lawsuit, and I I hit on
that a while ago. During alawsuit, that's when things are
really going to be exposed if ifit's written correctly or not.
Because Yes. During if it's justa physical damage to the like,
(14:09):
an a new roof or water damage orsome, chances are the claims
adjuster is not gonna go thatdeep into it to figure out who
actually owns it, you know, onthe deed.
And most and here's the thing.People that own rental homes,
they don't care at that point.What they care about, though, is
a lawsuit because that's whatcould ruin them is a lawsuit.
(14:31):
And that's when it comes out.
Stephanie (14:34):
But the physical damage would still be covered.
Right? So, I mean, if you Idon't know, I think home, but
I'm saying if you own the home
Dennis (14:41):
Who owns the home? Who's
Stephanie (14:42):
If the individuals own the home.
Dennis (14:45):
Okay.
Todd (14:46):
And
Stephanie (14:48):
somebody thinks that everything is through the LLC.
Right? But you're like, oh,well, you Todd checked the deed
thing and it's mister andmissus.
Dennis (14:56):
Okay.
Stephanie (14:57):
And then storm blows through. They're getting a
check. Well, check goes toeither Mr. And Mrs. Or if they
have in the LLC, then it goes tothe LLC.
So, like, even so at that point,it doesn't matter because either
way, they're getting the checkand they can cash the check.
Right?
Dennis (15:11):
Well, no. Well, if it's just physical damage,
Stephanie (15:15):
it's physical damage like
Dennis (15:16):
no, they're probably the adjuster is probably going to.
Okay, let me back up. We've gotto clear some things up with
your example.
Stephanie (15:22):
Okay.
Dennis (15:23):
Who owns the who owns the house? In your example, who
owns the house?
Stephanie (15:29):
Let's say LLC owns it.
Dennis (15:31):
Okay. And what is the name of the who's the name of
the what's the name of thepolicies under?
Stephanie (15:37):
Mister and missus. But mister and missus Control
LLC.
Dennis (15:43):
Mister and missus are members of an LLC.
Stephanie (15:46):
Sure. They're members of the LLC.
Todd (15:47):
They don't
Dennis (15:47):
own the LLC. They're members of the LLC. And that's
not splitting hairs. That's justa legal thing.
Stephanie (15:52):
That's fine. I'm gonna say tomato tomato for the
purpose of this, though. I letyou I'm sure you are more
correct. So members of the LLC,managing members, if you will,
mister and missus managingmembers or managing member,
whatever, doesn't matter, butthey LLC.
Dennis (16:13):
The then this case, the physical damage to the to the
house, the the check willprobably be written to the
individuals who were on the nameof the policy. I don't think
that the adjuster usually goingto go that deep to find out if
they're actually the owners willlook it up on the appraisal
district. So in all that, soyou're probably not going to
(16:33):
have an issue with that example.
Stephanie (16:34):
Okay, so that's I guess that's kind of my point,
though, is that with the it'sgoing to be it should be covered
if the insurance was there andthe coverage was there and it's
Dennis (16:42):
But it doesn't have to be, but it could be. It's
probably going to be.
Stephanie (16:45):
Yeah. And I would say most insurance companies at that
point are probably going to lookto find the coverage if you're
the insured. But I know when wewere when I was a claims
adjuster, we would have to lookup who the owner was. So let's
say it was I guess it'sdifferent because it's
liability. So it's a differentexample.
So never mind.
Dennis (17:06):
Because like Physical damage portion will probably be
be paid.
Todd (17:09):
Okay.
Dennis (17:10):
That's my gut telling me that. I think that you're gonna
run into when it becomes verylegal. And now there's a
lawsuit. I think in today'sworld, insurance companies gonna
be looking to get out of pain.
Stephanie (17:21):
Different. I'm not talking about lawsuit. I'm
talking about property damage.
Dennis (17:23):
No. No. We're talking about two different
Stephanie (17:26):
yes. You brought up property damage. I was touching
on property
Dennis (17:29):
about two different types of claims, liability
versus property.
Stephanie (17:33):
And that's why I negated. I was like, well, never
mind on that. But even withproperty damage
Todd (17:37):
Mhmm.
Stephanie (17:38):
Ice I can't
Dennis (17:41):
Probably not
Stephanie (17:41):
imagine they would make a huge when you have mister
and missus who
Dennis (17:45):
I don't think they would.
Stephanie (17:46):
Are the members of the LLC. I can't imagine that
there's an argument to not
Dennis (17:50):
have coverage. They would. But I think the insurance
company would have the right tosay no because it's not the same
ownership. Okay. So but chancesare they're not going to be that
picky about it.
Todd (18:02):
What I love is we've five, ten minutes running around this
because there's misunderstandwhen I say that, trying to
understand. So when I'm talkingto a client, this is where when
I'm talking through this, thisis where it makes sense if
you're scaling and addingproperties. What's the ideal
thing? Get your LLC set upfirst. Start moving your
(18:23):
properties when you buy them.
It's directly into the LLC soyou're not having to do a quick
claim deed or something else toflip it down the road. Because
that's the thing is people gettired. They don't procrastinate.
I don't want to deal with that.I'll get it retitled later on.
And later on doesn't happen. Andso to me, the ideal thing is if
you're buying properties oryou're wanting to scale, even if
you've just got one or two, isif you've got the LLC at the
(18:46):
beginning, that's who the loanis going to be in. They may
still look at you financially,you and your wife as far as the
house. But the house gets thebottom loan. Everything's in the
name of the LLC.
So it's all done from thebeginning correctly. Insurance
follows suit. It's going be inthe name of the LLC. So
everything is done it's it'swhen somebody's already got
pieces in play is, okay, let meunderstand all the pieces to the
(19:09):
puzzle. And now let's talk abouthow you get it correct.
Mhmm. Because at the end of theday, it's like, great. I got a
lawsuit over here at a house.Something somebody falls.
They're going I don't know.
There's a banister in astaircase that didn't do what it
needed to do. My grandmotherfell as she was going down.
Guess who's on the hook? Ipromise you somebody that has
that happen. Bannister comesloose, something, whatever it
(19:29):
is, they're coming aftersomebody.
And so then their question is,how do I protect everything else
that that homeowner has? Mhmm.That's where to me the asset is.
Did we set it all right so thatthat one event stays local to
only that home and that policy,and it doesn't jump through that
(19:50):
barrier to their personal assetsand everything else.
Stephanie (19:53):
So you just brought something else up though, that
home specifically. Right? So isthere at what what is the
scenario to where it opens it upto say, oh, well, now we can go
after everything that you have.
Todd (20:07):
Well, that's where you get above my pay grade. But if
you've got if you've got ifyou've got the LLC set up, but
they're commingling funds,they're paying for repairs to
that house out of their personalfunds rather than out of the
LLC.
Stephanie (20:20):
No. Let's say it's an LLC that has five it's got five
homes.
Todd (20:23):
Five homes. Okay.
Stephanie (20:24):
Right. So how do you stop them from going after the
entire LLC and just saying, hey.This is the one home.
Todd (20:29):
I've got investors that they some of them, they still
put them all together. I haveother ones that are like, okay.
We put a million dollars worthof homes in one LLC, and then we
set up another LLC and anotherLLC. So I see it done different
ways. Okay.
I don't have the magic answer tothat.
Dennis (20:45):
I that's when you have to get a lawyer involved. Is it
better to put them individual?Because we've seen it where it's
the address LLC. This nextaddress, like 123 Main Street
LLC.
Todd (20:57):
Right.
Dennis (20:57):
456 Main Street LLC.
Stephanie (20:59):
So just then we split with the to the one.
Dennis (21:01):
You can, and you could do it that way. It really
depends on the lawyer and whatthey're looking at as the whole
because we don't know that. Butif there's common ownership
between those, common ownership,meaning that it's the same
member or same two members, theyown everything together, then we
could we could write it all onone policy. Right? Mhmm.
(21:25):
We could write it all on onepolicy. So there's things that
we can do rather than writing abunch of different insurance
policies for all ten, fifteenhomes to stick it all on one
policy because we have commonownership.
Stephanie (21:39):
Okay. And that's a totally different thing that
we've been talking about. So doyou want to elaborate on that at
all?
Todd (21:44):
Yeah. I mean, to me, we're the you know, I have people that
have or clients that have shortterm rentals. I have some that
have long term rentals. Andwhere's the bigger exposure?
Well, if I'm just looking at itfrom a bird's eye view, I'd be
more worried about having anumbrella or making sure I've got
it more protected if I haveshort term rentals.
I have not one tenant in thereall year long learning where all
(22:07):
the switches are, they can walkthrough the house in the dark.
I've got potentially forty,fifty different families coming
in there, weekends, probablydrinking going on. There's other
stuff going on, partying, whathave you. Much higher chance of
loss, injury. So would I want anumber on somebody that's got
short term rentals?
(22:27):
Probably. There's probably goingto be a swimming pool. Just
depending on where it's located,there's going be a lot more
risk. So would I want to makesure I've either got more
coverage protecting my assetsfrom that home. Or to Dennis'
point, Okay, maybe I'vestructured the short term
rentals where I only put two orthree in one LLC.
(22:47):
Or maybe I do them allindividually. So if something
happens here, it's not to saythe attorney couldn't sit there
and go say they all have commonownership. But that attorney's
got to do a whole lot morelegwork. And are they going to
do all that? Are they going tobe more lazy?
I can't answer that question.But I'm just looking at it. How
do you protect? What are thesteps I can do that aren't going
to be huge and laborsome for myclient to protect that? And to
(23:12):
me, the biggest one is if I'vegot short term rentals, I'd
probably want at least anothermillion, maybe $2,000,000
umbrella, probably $2,000,000$3,000,000 and it covers their
entire portfolio.
That should cover just aboutanything coming. I mean, even if
somebody loses their life, Iwouldn't think that loss you'd
never know. But I'm just saying2,000,003 million dollars
umbrella, that should cover thelion's share of what could
(23:37):
happen, even loss of earningsfor that spouse if somebody got
killed or something like thatfor loss of income and so forth.
But I just run into people thatdon't really think about that.
I'm like, yeah, it's what'sgoing on inside of the house.
Swimming pools, those alwaysscare me. I'm always wanting
liability, whether it's ahomeowner or otherwise. I'm
like, you don't know
Dennis (23:54):
who's Well, even hot tubs, got slipping
Todd (23:56):
through Yeah, the yeah. So it's just being mindful of what
those risks are and how do Imitigate for that? And then kind
of going the second directionaround that when you were
talking about, do I set up adifferent LLC for every one of
them? Probably the biggest thingwhen I talk with investors, if
they're scaling I mean,somebody's got more than five
(24:17):
properties, we've got somecommercial products. And this is
probably one the things I lovethe most is I don't know, let's
say somebody's got sevenproperties.
Doesn't sound like a whole lot.But in the insurance world,
anytime I'm doing a renewal, Idon't care if it's a car, home,
or whatever, I'm going to talkto that person three times
probably over just that onepolicy. I'm going call them to
let them know, we're looking atyour policy. Have there been any
(24:39):
changes? Then I'm going back andlooking through all of our
carriers to run a quote,bringing that back to them.
Then if we're looking atanything else that we need to
change, I'm gonna talk to thatcustomer probably three times on
one policy. I've got sevenhomes. I'm touching I'm telling
that customer 21 times a year totalk about those properties.
Then I still have their home,their auto, their personal
(25:01):
umbrella, and whatever elsethey've got. I'm like, I would
hate to talk to me 25, 30 timesa month
Dennis (25:08):
Boy, or a year. I'm telling you, one day is tough.
Todd (25:11):
Yeah. So Yeah. Yeah. But so who wants to have to deal
with that? And so we havecarriers that I can put all
seven homes, one policy wheneverwe bring it together.
Dennis (25:22):
And we ran into that. I I think I know what you're
thinking of. You're thinking ofthe one we that you that you ran
into just recently where theyhad they had we had one of the
rental homes. They had sevenmore. Yeah.
And you came in and with aparticular program we have,
saved them $1,112,000 dollars ayear on overall, gave them
(25:43):
better coverage. And now one ofbut the selling point wasn't
even the premium. The sellingpoint, she's like the wife was
like, you mean you could put allthese on one policy? You don't
have to deal with it once.Todd's like, yeah.
She's like, really? Yeah. And itwasn't even about the money. It
was just about the time that shespends tracking these things.
(26:05):
Now she has to worry about itonce a year.
Stephanie (26:07):
Right.
Todd (26:08):
Yeah. And you you know, she's asking me, it's like, what
happens if I buy another house?I'm like, because we made it
easy? She's like, yeah. I'mlike, okay.
So we put this in place.September, you buy another
house. We add it on for whateverremaining months. Same policy we
just add in. If it's six months,we add in six months premium,
and we roll on down the road.
Dennis (26:26):
Here's a question for you. I already know the answer,
but I'm gonna ask you. Okay. Saythey buy a house, but this gotta
have some work done on it. Canthey put it on that same policy?
Todd (26:35):
If they are, yes. As long as two things don't happen. As
long as they're not changing thesquare footage
Dennis (26:42):
Mhmm.
Todd (26:42):
And we're not looting moving load bearing walls. Mhmm.
Those are the two that so
Dennis (26:46):
So it could be vacant and be renovated.
Todd (26:48):
Yes. And it can go up under as a renter's policy or a
landlord policy versus having todo it as either a vacant
dwelling or a builder's risk. Soyou may sell one builder's risk
because if they've got, I don'tknow, two or three pallets of
wood outside, you got airconditioning that hadn't been
installed, you may so wantbuilders risk just in case that
stuff grows legs and walks awayat night. But as far as the
(27:12):
structure itself, yeah, youdon't need to do a vacant
dwelling policy. You just set itup as the landlord policy, and
it just moves on down the road.
And so that's one of the nicethings. Not getting off into the
weeds, but one of the biggestthings is water coverage is
covered under that. Theft, allof
Dennis (27:28):
that Yeah, let go on with that, is that water
coverage for a lot of thosetypes of policies is excluded.
So is vandalism and maliciousmischief is excluded. This
policy that we're specificallytalking about right now covers I
(27:49):
don't know if it covers VMM, butit certainly covers water.
Todd (27:51):
It covers VMM? It does as long as there's work being done
on the house, which it's gonnabe if they're doing a if they're
doing a if they're buying anddistressed and they're
rebuilding, or renovating, yes,it's got contractors in there.
That timeline never stops. Soonce they're finished, if nobody
moves in within sixty days, thenyes, it would fall to it would
(28:13):
still be up under the landlordpolicy because the intent is
still to rent it out. Mhmm.
But, yes, you would losecoverage for theft and malicious
loss on that side of it. Mhmm.But chances are they're gonna
have it rented in sixty days.But the nice thing is I'm
staying
Dennis (28:28):
of Yeah.
Todd (28:29):
I'm staying abreast of that. So we're having those
conversations before we get tothat place. And that's probably
the biggest thing is people thatdon't sell this stuff all day
long or they're not in it, theydon't know where those timelines
are for their client. Clientdoesn't have a clue that, oh, I
haven't rented it out in seventyfive days, three months.
Dennis (28:47):
Oh, most companies, no coverage if the adjuster finds
that out. But
Todd (28:52):
the client wouldn't know that. Most of the time, don't
know that and what's going on.And I'm like, well, this is
where I live. I understand theimportance of that. So when
you've got it renovated, myfirst question is, Okay, we've
got till September 15 orwhatever that sixty day mark is.
I've got it on my Outlook. Whatam I doing? I'm calling them
before that date saying, have wegot it rented? If we don't, then
(29:13):
we need to adjust it a differentway. Yeah.
Dennis (29:15):
Need to Does it change the premium if we flip it? Flip
the switch on the type ofcoverage it needs?
Todd (29:20):
No. If it goes back I mean, if it goes vacant
dwelling, no, nothing changes onthe cost. The coverage goes
down. Why
Dennis (29:27):
is The coverage has changed, but not the premium.
Todd (29:29):
So why is that important to my client? You may to go out
there every day or two and checkit because if you have a water
loss or something else going on,you are the one person that can
tell me something's happened sowe can deal with it once we get
past that sixty day mark. Soit's just making the client
aware of what's going on. Andthat's probably the biggest one
(29:51):
on that side of it. The otherthing is I have clients who are
like, well, if I want the costto go if I'm looking for ways to
bring down my cost, well, if youown the properties outright or
you've got equity in them, Idon't have to insure at 100% to
value.
Because the policies we'retalking about, if you've got
more than five properties on thecarriers that will write the
(30:15):
single policy with multiplehomes, it's commercial. It's a
commercial policy in certainaspects. So in the commercial
world, you can insure at 80% tovalue. So if I have a $400,000
home, I can insure that at$3.20. $3.20.
Well, insurance on $3.20 is lessthan 400. Granted, if the whole
home was 100% loss, I'm onlygoing to get $3.20 out of it
(30:39):
because that's what they'regoing to pay. But the odds that
there's not going to besomething less of the home, even
if the whole thing burns, you'restill going to have the frame.
You've the pad. You've still gotdepending on what the damage is
to it, we're not having to putback 100% of that.
But I'm not going to tell you itcan't happen. But the reality is
it's probably not going to be100% loss.
Dennis (30:56):
Well, here's something that you may or may not
remember. In most of the citiesaround, at least DFW Mhmm. If
you have 5051% damage to a home,the fire chief or whoever it is
Mhmm. Can say, no. We gotta tearit down and rebuild it.
Todd (31:21):
Right.
Dennis (31:22):
So so I think that would be something that But the the
fact of the matter is it couldit would still be classified as
a total loss. Yeah. Right?
Todd (31:32):
And it's it's I mean, it's risk it's risk mitigation from
the client. If they're like,okay. I'll I'll take that risk
because it may save me anotherif I've got seven, eight, 10
properties, and it saves meanother 10,000 in premium to
bring that down to 80%. Mhmm.But that gives me enough cash
flow to go out and buy two moreproperties.
Dennis (31:47):
Yeah. We're gonna be I wanted to talk about that. Yeah.
So the idea of saving money,especially for folks that are
trying to scale Mhmm. Whetherthey've got five and trying to
get to 10 is we know I think youtalked to a guy today, and you
mentioned I'd ask you, did youmention to him about ratios and
stuff like that?
(32:07):
I And forgot what the answer wasbecause I was dealing with, you
know, all the stuff I've beendealing with. But but in order
to get loans, sometimes theyhave to hit certain ratios,
income to expenses or thingslike that. Well, now if they
drop their premium, if they everlower their premium, even more
and maybe get lucky within thisparticular case, with this one
(32:30):
program we're talking about, andget better coverage than most
that we see, win win. So nowthey save a $100 per home Right.
A month per they save a $100 permonth per home.
That's $1,200 per home per year,and they've got six homes.
That's $7,200, that could changethe ratio enough for them to
(32:50):
qualify for the that next hometo get it into some sort of
loan. And because ourunderstanding of how this market
works is these investors aren'tlooking to make money off of the
home right now. They're lookingjust to make sure it pays for
itself. They're gonna make theirmoney when the home sells.
(33:11):
Right?
Todd (33:12):
I mean, they may wanna hopefully take money away from
it every month so they're savingso that they can pay for future
repairs or what have you. Butlike the lady that I just got
through finishing with, she was$712 a year. I'm like, that's a
half of a roof every year.That's an air conditioner for
each I mean, for her, it wasenough money. It's like, okay,
(33:32):
now I've got a windfall overhere if I want to start doing
some other things to theproperties or just sock it away
that it becomes a big number.
Maybe it was only $100 $150 perproperty. But when you start
taking that time, just sevenproperties times twelve months,
yes. It start it became a muchPer month. Yeah.
Stephanie (33:51):
I think a lot of people would kill to save $150
per month Yeah.
Todd (33:56):
Well on
Stephanie (33:57):
anything. Right?
Todd (33:58):
Well, and to me, the bigger thing is if you're trying
to keep your clients in there oryour customer, your renter, if
you don't have to go back andraise rents every year because,
wow, there was a big enoughOkay, dollars 150 a month on
insurance for that one property.If you keep them in there and
they don't have to go someplaceelse, one, now you're not having
(34:19):
to go back in, get it cleanedup, get it ready to rent again.
You're keeping that customer inthere another year. So there's I
mean, to me, it's a win win. Imean, I talked to some of our
customers that are renters.
And I'm like, might be worth youputting my name out to your
landlord because if I can helpsave them from having to come
back and raise your rents. Imean, the only reason that
(34:42):
landlords are raising rents arebecause, okay, my taxes, my
insurance, my HOA fees, they'regoing up. Yep. You know? Yeah.
And so if you can help curb someof that. So
Dennis (34:54):
Yeah. I mean, it's helpful. It's it's a great
program that we have. We havemultiple programs like this, but
one particular that he's talkingabout has been very kind to
investors. And so but we do havetwo other ones that do some
similar stuff.
They just don't have quite asmany bells and whistles, but for
(35:16):
some clients, they're a betterfit. The thing is we just have
to look and see what you have.We've got to wrap it up, but we
appreciate you coming in and andtalking about this. And so if
anybody out there has investmenthomes and are looking to scale,
we would love to give you acall. You can give us a call at
(35:37):
833505 quote.
That's like 7868, something likethat, quote. 83833505, or you
can email us atcontact@igwpodcast.com.
Contact@igwpodcast.com. We'dlove to talk with you, see if
(36:00):
there's anything that we mightbe able to help with if you're
an investor. And we are in anumber of different states.
And so if you have stuff spreadout, it's something we can also
look at. Anyway, we appreciateit, and we'll talk to you again.
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