January 7, 2025 • 22 mins
Insurance might not be the most thrilling topic for real estate investors, but as Harrison Henson of Goosehead Insurance reveals, it can make or break your investment success when disaster strikes. This eye-opening discussion cuts through insurance confusion to deliver essential knowledge every property investor needs.
Harrison expertly breaks down the critical differences between homeowners policies and dwelling policies, explaining why using the wrong coverage for your rental property could leave you completely unprotected. From the amusing example of kittens causing roof damage (covered under comprehensive policies but not basic ones) to the sobering reality of lost rental income after a disaster, this conversation illuminates the high-stakes world of property insurance.
Real estate investors will gain clarity on the three levels of dwelling policies (DP1, DP2, and DP3), understanding which provides true comprehensive coverage versus basic named perils protection. The discussion also covers essential endorsements every landlord should consider: loss of rental income coverage, landlord liability protection, ordinance/law coverage, and equipment breakdown insurance. With today's insurance markets becoming increasingly complex, especially in states like Texas, Florida, and California, this guidance provides a roadmap through what Harrison calls "muddy waters."
Whether you're an accidental landlord who was "forced into landlordship" or a seasoned developer with multiple properties, this conversation delivers practical insurance wisdom that could save your investment when disaster strikes. As Harrison wisely notes, "Insurance isn't a problem until it becomes a problem" – so prepare now by understanding what coverage you truly need. Have questions about your investment property insurance? Reach out to Harrison directly for personalized guidance.
If you need assistance in obtaining funding, book a free discovery call at www.tdjequityllc.net. Let us know the scope of funding needed and the amount. A broker will contact you to discuss your funding needs. And remember, at TDJ Equity Funding, we do not force your funding needs into a lender's box but find a lender's box that fits you!
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:13):
Ready to get the inside scoop on equity funding?
Tune in to TDJ Equity FundingInsiders Podcast for an in-depth
look at what it takes to accessfinancial capital and maximize
your investments.
Hear from experiencedprofessionals, including bankers
, underwriters, loan officersand industry experts, as they
(00:36):
share their unfiltered storiesand valuable lessons on securing
funds.
Speaker 2 (00:42):
Curing Funds.
Welcome to our webinar givingpower to the business owners
webinar series, and today wehave an insurance agent that is
(01:02):
here with us to discuss thetopics that we really need you
all to understand of what'sgoing on with them.
Today's topic is dealing withinsurance, dealing with real
estate, investor property orjust your property in general,
because we do want to talk toyou guys about the property area
of True or Duh, but this iswhat we want you to know as well
.
I should have introduced myself.
I got to start over.
This is ridiculous.
(01:23):
We're fine.
Speaker 3 (01:24):
We're fine.
We're fine, that was great, Ithink.
Speaker 2 (01:28):
Hold on, hold on, hold on.
I'm looking for a little bittynote.
See, that's just it.
If I wouldn't have made thatdoggone note, we wouldn't be
doing this, but I like the note.
Well, tim is back there.
Oh, it's it out, and that'swhen it got and took it away
from me.
Stop looking down so much ofwhat, okay.
(01:49):
Okay, I can do this, me and himdid this before, yeah we're
good, we got good, we're good nopressure I'm not gonna worry
about it just let it roll.
Okay, I got it Okay.
Hello and welcome to TDJEquity's webinar that is set up
(02:10):
for giving power to the businessowners.
This is our webinar that we dowith you guys throughout the
next few months, and what we'regoing to give you is some
information that will help youunderstand it more when it comes
to funding.
Hi, my name is JacquelineJackson and I'll be your host
Today.
We are having a special guest,which is an insurance agent that
(02:32):
is actually giving us someinformation on getting property
and how insurance actually playsa part of that.
His name is Harrison Henson.
He's with Go GooseheadInsurance and so at this time,
we want to turn it over to himso that he can give us a little
information about him goingforward.
Thank you for coming, harrison.
(02:53):
We're glad you're here and ifyou would induce yourself and
tell us a little bit aboutyourself.
Speaker 3 (02:58):
Hi, thank you so much .
Yeah, so, like she said, myname is Harrison Hess.
I'm glad to be here talking toyou guys.
So, like she said, I work at acompany called Goosehead
Insurance.
We're the largest independentbroker in the nation.
I work specifically withpersonal lines insurance and,
(03:20):
moreover, my clients are focusedon real estate investment and
development.
So what I'll be talking abouttoday is just kind of going over
some crucial things that mostinvestors or developers really
need to know when getting theirproperties covered.
I know insurance is kind of atopic that nobody really wants
to talk about or talks about awhole lot, so there's a lot of
gray area and I hope that, goingover this webinar today, we can
really cover a lot of thethings that most people need to
know and don't know.
Speaker 2 (03:50):
Okay, great.
So this is something thatsounds like it's going to be
very informative.
So let's start off asking whatour first question that we have
we have the first question ishow do we deal with the policies
that's different in thecoverage, different coverage as
far as the rental property andthen the owner-occupied property
.
Speaker 3 (04:00):
Yeah, of course.
So there's going to bedifferences whether it's going
to be a homeowner's policy or adwelling policy, which is going
to be more along the lines ofsomebody who's in real estate
investment and has those intheir portfolio.
So a dwelling policy is goingto be used for a home that's in
your portfolio, that you'recurrently renting out to
somebody that you're not livingin it yourself.
(04:23):
Ways that these kind of differfrom from homeowners are going
to be your different coveragelevels.
So, just going based off that,for your dwelling policies,
there's going to be differentlevels of dwelling policies that
you have, based on thecomprehensive coverage that
they'll they'll allow.
Speaker 2 (04:41):
There's going to be a dp1, dp2 um, allow, there's
going to be a dp1, dp2 and a dp3, right?
I think we had talked aboutthis earlier.
It's actually different levels.
Let me say this part soeverybody can understand.
Maybe you've heard these termsof non-owner occupied and then
owner occupied.
Owner occupied is like thehouse you live in.
(05:03):
You live, absolutely yes.
Non-owner-occupied is, like hesaid, when you rent it out.
But also, if your business isrenting it, you know it's paying
for it.
That's not where you physicallylive.
It's your business, though it'syours.
That's still considered, youknow, as a way of commercial.
Basically becausenon-owner-occupied and occupied
(05:25):
in a commercial building isconsidered commercial insurance
right.
Both of those requirecommercial insurance and not the
owner-occupied insurance, tomake sure you all understand
that.
So now you're going to breakdown the different levels of
those insurance.
Speaker 3 (05:39):
Yeah, and for dwelling policies.
So if it's just if you're areal estate investor that owns a
portfolio of differentproperties, your dwelling policy
that you don't live in, thatyou're renting out to a single
family, or if you have afour-family quadplex or
something like that, that won'tnecessarily require a commercial
lines.
That can be a personal linesand you can add comprehensive
(06:00):
coverage to that as well.
If, say, you're filing under anLLC or you have that in your
business portfolio, then youcould add the commercial policy.
Speaker 2 (06:07):
Let me ask you a question.
I'm sorry, harrison, to makesure I understand Now.
You're saying dwelling policy.
A dwelling policy is not thehouse I live in.
Speaker 3 (06:17):
No, ma'am, that would be a homeowner policy.
Speaker 2 (06:19):
That's called homeowner policy.
Speaker 3 (06:21):
Yes, ma'am.
And then?
Speaker 2 (06:21):
when you're dealing with a rent policy or rental or
non-owner, that's a homeownerpolicy.
Yes, ma'am.
And then when you're dealingwith a rent policy or rental or
non-owner, call it dwellingpolicy.
A dwelling policy, yes, ma'am,thank you.
Or, if you're a, developer.
Speaker 3 (06:29):
Even If you're a developer, we have vacant home
policies.
So that's, if nobody's livingin it.
Say, you just built a home.
I have a developer that I workwith now that just built four
homes that I've insured, andwhat that form is on, that's
going to be a vacant dwellingpolicy.
So nobody lives in it yet, buthe built it and he wants it
covered.
(06:55):
Same thing for if you'rebuilding a property and it's
under construction currently,then you would have a builder's
risk policy which will cover itfrom vandalism, theft, things of
that nature that can occurwhile it's either vacant, that
was just built, or still underconstruction.
Speaker 2 (07:01):
OK, so let's go back to this vacant policy.
So you're saying the vacantpolicy again.
We talked aboutnon-owner-occupied right and
that's when I need to get thatpolicy, when I have what a
tenant in there, then they movedout and now it's vacant, or
when should I get a vacantpolicy?
Speaker 3 (07:18):
Yeah, perfect.
So you got it pretty much right.
Anytime that you have aproperty in your portfolio or
maybe you're a developer and youjust built one and nobody's
living it, living in it at themoment there's going to be a
different coverage than if youwere to have tenants that would
be a dwelling policy and if youdon't have any tenants, then
it's going to be vacant becausethere's nobody living in it and
there's different coverages anddifferent requirements for those
(07:38):
insurances.
That, sitting down and talkingwith a professional like me, we
can go through and get you linedup with the right one that
sitting down and talking with aprofessional like me, we can go
through and get you lined upwith the right one.
Speaker 2 (07:49):
Right, so?
And then you mentioned that weneed builders policy is when we
were actually doing what rehabon the job.
I'm talking about a non-ownernow right.
Speaker 3 (07:59):
Right, of course, and it's still along the lines of
whether it's a portfolio or anew building.
Basically, if it's underconstruction, if you're
renovating it.
So if you do a lot of fix andflips and you're renovating the
property excuse me, and nobody'sliving in it at the moment and
it's under construction, you'regoing to have that builder's
risk policy.
Speaker 2 (08:14):
The builder's risk policy.
Okay, so now let's talk aboutthe difference between because
you and I have actually had thisconversation before.
So I was kind of stunned thenand we kind of talked about in
the office that there are somany different degrees of
insurance policies.
So I definitely want you toexplain that DP1, dp2, and DP3
(08:36):
policy.
If you could explain that to us.
Speaker 3 (08:39):
Absolutely, absolutely, yeah, and this is
pretty crucial too.
So so DP will stand for fordwelling policy, like we talked
about earlier, and there's threedifferent levels, just the same
as a homeowner's policy.
So the different forms we'llwrite on for a homeowner's,
which is the one you live in, isan HO1, ho2, ho3.
For dwelling policies followsthe same guideline, except it's
a DP1, dp2, dp3, respectivelyfor dwelling or for dwelling
(09:05):
policy, sorry.
So a DP1 is going to be on anamed perils basis, so it's
going to be for specific losses,so it's going to be the least
comprehensive coverage.
And a DP3, on the other hand,is going to be your most
comprehensive coverage, becauseit's going to be an open peril
policy, so it covers all perilsunless exclusively stated
(09:28):
otherwise.
So there has to be namedexclusions, otherwise it's an
accepted peril.
So an example of this that Iactually just had this week,
which is kind of funny we had aclient that was filing a claim
and what had happened was therewas a kitten that had lived in
(09:49):
their attic and had six babies,and they clawed through the roof
and left a hole in the roof andthe ceiling.
So they have an HO.3 policywhich would cover that peril,
because kittens are not statedas an exclusion on their policy.
So an HO.3 would cover that, orsorry, not an HO.3,.
A DP3 would cover that, orsorry, not an H03, a DP3 would
(10:10):
cover that.
That's the most comprehensive.
That's why you say it's open.
Speaker 2 (10:15):
Wow, I didn't know that.
So it's open because you havemore, like I said, a higher
coverage of things compared to,I guess you said, a DP1.
If I had that, it wouldn'tcover the damage with the cat.
Is that what you're saying?
Speaker 3 (10:27):
No, no, ma'am, because DP1 is going to be basic
, named perils.
So like wind fire, things likethat, like the basic ones, flood
damage or not flood damage,water damage, things of that
nature are going to be just thenamed covered perils.
Speaker 2 (10:45):
So let me ask you this so is it important to
really?
I guess we need to read ourpolicies to know what type we
have or what do we do?
Ask for that Because we onlylearn this terminology because
of you.
Speaker 3 (10:56):
Right, exactly.
Speaker 2 (10:57):
So what do we say?
We want to say, OK, I want tohave because.
What do we say?
Do I need to have the leastpolicy, the best policy?
What do we do?
And then we see what we'reactually getting.
So we'll know that that's whatwe got.
Speaker 3 (11:10):
Yeah.
So when say you're working withme, we write on DP3s and HO3s,
mostly we go with the mostcomprehensive approach just off
the bat, and that's what I dowith my business but say you're
not working with someone like me, what you're going to want to
ask from your agent is you'regoing to want to know the perils
on your policy.
A copy of your declarationspage or your application will
(11:32):
show you all your coverages onit.
You want to make sure you checkwhich form it is.
So if they're writing on a dp1,that's going to be the named
perils form.
That's going to be the leastcomprehensive.
A dp2 is just a little morecomprehensive and then the dp3
is going to be your most um so.
So, asking which form they'reriding on, uh, builders, risk
and vacant properties um, thosetypically are one policy form
(11:56):
that they'll write, so they'renot necessarily in order of the
dp1, dp2, db3 right, right, sothat's how they go, okay.
Speaker 2 (12:02):
Well, let me and I think see that's what I'm saying
.
That is good, that's greatinformation.
What I want to say now let'stalk about when we have okay,
this is what we get a lot.
As loan brokers, we deal withgetting money for real estate
investors, right, of course,sometimes real estate investors
as we say non-owner occupied arenot actually in it for the
(12:24):
business.
They were more like forced intolandlord ship, okay.
So the understanding that somepeople have and I want you to
correct us and let us know theright way is that I was living
in the house and I moved out andI never changed my insurance.
It was a homeowner policy.
So explain to us, how does thecoverage cover a loss for us If
(12:46):
I did as a rental incomecompared to if I did it as if I
lived there?
How does that work?
What's going on with that?
Speaker 3 (12:52):
Yeah, so so if you're not living in the home and you
have a homeowner's policy or or,uh, uh, an owned, uh dwelling
policy, where, where the owneris occupying it, um, and you
move out and you're not actuallyliving there and you have
tenants in there, there's a lotof coverages that your insurance
company, if they find that out,they just won't cover you,
(13:13):
they'll cancel your policy, evenif they decide that that's not
the risk they want to take on,because that's not the policy
that they sold you and it's wellworth it.
Especially so talking toinvestors specifically, or
people that end up renting outtheir house, even if it's in a
situation where they're forcedto do it, you still want that
(13:35):
rent money that you're gettingpaid.
Say, there's a loss thathappens and part of the house
burns down or there's a floodand you can't have your tenants
living there at the moment, eventhough it's still a homeowner's
policy.
If you're not living thereanyways and your tenants can't
have your tenants living thereat the moment, even though it's
still a homeowner's policy, ifyou're not living there anyways
and your tenants can't livethere and pay you that rent,
then you're not covered for lossof rents on a homeowner's
(13:57):
policy, whereas if you have anon-occupied dwelling policy and
you have coverage for loss ofrents in the event of a loss and
your tenants can't live thereand pay rent to you, you're
still covered for that loss ofincome that you'd get from if
they were still living there andrenting it.
Speaker 2 (14:12):
Really nice.
So basically what you're sayingand I think people don't
realize the insurance is thereto protect you in case you have
a disaster.
Right, you know calamities, butif you move out and you don't
(14:33):
change that insurance tocommercial what we call it
commercial insurance, you knowthen what happens is like he's
saying that you won't be able tomake those claims on it and a
lender doesn't want to do dealwith property is not adequately
protected, doesn't want to dealwith property is not adequately
protected Of course.
So even if you did not know andignorance is not any excuse of
the law that's the problem witheverything you still gonna have
to deal with.
They're not gonna do a claim onit because you've had a renter
in there, and that's the case.
(14:54):
So the thing is, we don't knowhow each insurance may do it,
but that's pretty much the lawon both of them all of them.
But we need to learn more aboutwhat type of policy we have
along with what situation wehave, because we need to check
accordingly Right.
Speaker 3 (15:10):
Absolutely.
Yeah, and it's all about youknow it seems like a headache to
go and switch possibly, yourinsurance or go through this or
go through that, but I promiseyou the headache from dealing
with a loss that won't becovered because you have the
wrong insurance is much greaterthan anything you'll have to go
through in switching it.
Speaker 2 (15:26):
Okay, and I agree that's definitely something we
did.
So I want to go through and askyou a couple of few more
questions.
One I wanted to ask you that wehad was that are there specific
endorsements or add-ons thatcan be particularly beneficial
for protecting real estateinvestment properties?
Speaker 3 (15:47):
Yeah, of course.
So just a few of theendorsements that you can add on
to an investment property orthe dwelling policy that you
have.
Just some of the common onesare going to be like what we
just talked about earlier theloss of rental income coverage.
So in most cases real estateinvestors have rental properties
(16:07):
and they're making theirpassive income on people renting
it out and in the event of aloss you want your insurance to
cover that income that is comingto you, but you're telling us
that if that's something we needto get added to our policy, for
sure, right to make sure, saythat that yeah, absolutely,
(16:29):
absolutely that's, and that'sthat's a really easy thing for
for me on my end to check tomake sure that that's on there.
um, my developer that I justworked with now I went through
with his lenders and checked allof it because sometimes through
different companies they can benamed different things.
But that's where working withsomeone like me comes in,
because I'll know what's what tomake sure you're covered for
that.
So going through and makingsure that's covered is really
(16:50):
easy for us to do here and itreally helps out a lot.
I mean, that's going to be oneof the main coverages that
you're going to want for yourproperty for sure if you're
going to want for your property,for sure if you're renting it
out.
Some other ones includelandlord liability coverages.
So if something happens to arenter while they're there and
you're held liable for something, the landlord is held liable.
You'll have protection as faras tenant injuries, property
(17:14):
damage, things like that.
There's also ordinance or lawcoverages, so this would be like
additional costs of rebuildingor repairing property to uphold
current building codes orordinances within the city that
have changed possibly since youlast built or since you've
acquired the property, and thensewer drain and backup and
(17:35):
equipment breakdown.
So those, respectively thoseare endorsements that can add
either sewer backup, so ifthere's a buildup of water and
it causes water damage, or say,your HVAC system breaks down,
you'll have coverage for thatand the repairs as well with
those endorsements.
Speaker 2 (17:51):
Right and see, there's no way we could remember
all those endorsements.
So, like you said, it'simportant if we reach out to you
because you know what it is andI guess, once you find out what
we try to do are you trying todo the insurance for to live in
the house or are you going torent it out Then you can
actually go through and prettymuch guide them on everything
they need to have.
Speaker 3 (18:12):
Absolutely.
Speaker 2 (18:13):
And that's what I say .
That's why I wanted to bringyou on, because Harrison
Harrison so you all would knowhe works for Goosehead but he
works with real estate investorsa lot the developers and
everything so he's a great go-toguy when you try to get your
insurance for your properties.
He can handle any type of dealsyou have.
(18:34):
Just bring them to him.
I think that's great.
That's why we wanted to haveyou here, because we talk to
people about the insurance atthe time we need it at the loan,
which sometimes, as I've calledyou, is incorrect and which
takes a lot of time away fromthe process.
So, coming to you and that's whyI'm glad you was willing to
(18:56):
come on, so people canunderstand insurance is going to
be a problem if it's a problem.
So absolutely everybody needsto try to take care of it.
And if they don't know what todo, especially if they start now
, even if you've been doingrental for a while, I think
you're a great person for themto reach out to.
Speaker 3 (19:12):
We correct, okay, absolutely yes, ma'am, I really
appreciate you having me on andeverything, um, and that, yeah,
that is the goal I mean.
There's just, even just fromworking in the industry, there's
a lot that I didn't know when Istarted and a lot that I've
learned over time, that I know alot of my clients.
I'll be talking to them andthey'll say, oh, I didn me in
(19:37):
your corner helping you out and,like you said, insurance isn't
a problem until until it becomesa problem.
And nowadays, with the market,um, just the way premiums are
now and underwriting and thingsof that nature, I write in all
50 states.
Um, me or my team writes in all50 states, and Texas especially
, um, Florida, California,obviously those places the
(19:58):
insurance market has has beengetting hectic and very
confusing.
So for for a loan officer or areal estate agent or even just
an investor to try and andfigure it out, it's beginning to
become very muddied waters andand what I've been able to do is
really help guide my clientsthrough the muddy waters that is
the insurance market now soit's been nice to be able to
(20:20):
help out and be a resource forsure, and what he's saying is so
true with the market, becauseeven with us, things are
changing.
Speaker 2 (20:29):
We try to, we're keeping up with everything and
that's what we do every day.
Imagine you who don't do it howmuch stuff changes from week to
week to month to month.
So it's good to have a teamtogether that can help you get
the information you need so youcan make intelligent choices
when it comes to your business.
And I think having someone likeHarrison on your team under
(20:49):
insurance of course us, becausewe're the money person but
definitely having someone likehim that has, you know, the
knowledge, the experience andthat he can tell you what way it
will work and which way itwouldn't, because he knows we
need that.
We need that.
So that is awesome that you canprovide.
So Harrison has his email.
That's up there atharrisonhassettgooseheadcom, but
(21:10):
his number's there too214-453-1764.
Guys, please reach out to him.
Stay tuned to us.
Wwtdj F-A-L-L-C.
Sign up for our email so thatwe can see your notices when we
have webinars like this andother things that are coming up.
We want you to be a part.
(21:30):
Harrison, we thank you forbeing our first guy and we love
what you had to say.
Thank you, thank you, thank youand if you have anything you
want to say to the audiencebefore we get off, yeah well,
first I just want to say thankyou very much for having me.
Speaker 3 (21:43):
I've enjoyed it.
It's been so great getting tojust spread knowledge in an area
that is very important,especially for the people
watching and then for theaudience.
I just want to say thank youfor your time.
Feel free to reach out to me atany time.
Feel free to reach out to me atany time.
I'm open whenever you guys wantto talk.
I'm ready to build some ofthese relationships between you
(22:04):
guys and really, you know, guideyou through the muddy waters
that is the market nowadays, andwe'll both help you out as a
team and get you where you wantto be.
Speaker 2 (22:10):
All right, thank you.
Thank you All right, and to therest of you all again, thank
you for attending, lookingforward to seeing you next time.
Until then, you all take care.
Speaker 1 (22:21):
We hope you enjoyed this episode of TDJ Equity
Funding Insiders Podcast.
If you'd like to be a guest orget in touch with us, please
visit our website attdjequityllcnet.
Forward slash podcast or emailus at podcast at
tdjequityfundinginsidersnet.
Until next time, take care.
Ready to get the inside scoop on equity funding?
Tune in to TDJ Equity FundingInsiders Podcast for an in-depth
look at what it takes to accessfinancial capital and maximize
your investments.
Hear from experiencedprofessionals, including bankers
, underwriters, loan officersand industry experts, as they
(00:36):
share their unfiltered storiesand valuable lessons on securing
funds.
Speaker 2 (00:42):
Curing Funds.
Welcome to our webinar givingpower to the business owners
webinar series, and today wehave an insurance agent that is
(01:02):
here with us to discuss thetopics that we really need you
all to understand of what'sgoing on with them.
Today's topic is dealing withinsurance, dealing with real
estate, investor property orjust your property in general,
because we do want to talk toyou guys about the property area
of True or Duh, but this iswhat we want you to know as well
.
I should have introduced myself.
I got to start over.
This is ridiculous.
(01:23):
We're fine.
Speaker 3 (01:24):
We're fine.
We're fine, that was great, Ithink.
Speaker 2 (01:28):
Hold on, hold on, hold on.
I'm looking for a little bittynote.
See, that's just it.
If I wouldn't have made thatdoggone note, we wouldn't be
doing this, but I like the note.
Well, tim is back there.
Oh, it's it out, and that'swhen it got and took it away
from me.
Stop looking down so much ofwhat, okay.
(01:49):
Okay, I can do this, me and himdid this before, yeah we're
good, we got good, we're good nopressure I'm not gonna worry
about it just let it roll.
Okay, I got it Okay.
Hello and welcome to TDJEquity's webinar that is set up
(02:10):
for giving power to the businessowners.
This is our webinar that we dowith you guys throughout the
next few months, and what we'regoing to give you is some
information that will help youunderstand it more when it comes
to funding.
Hi, my name is JacquelineJackson and I'll be your host
Today.
We are having a special guest,which is an insurance agent that
(02:32):
is actually giving us someinformation on getting property
and how insurance actually playsa part of that.
His name is Harrison Henson.
He's with Go GooseheadInsurance and so at this time,
we want to turn it over to himso that he can give us a little
information about him goingforward.
Thank you for coming, harrison.
(02:53):
We're glad you're here and ifyou would induce yourself and
tell us a little bit aboutyourself.
Speaker 3 (02:58):
Hi, thank you so much .
Yeah, so, like she said, myname is Harrison Hess.
I'm glad to be here talking toyou guys.
So, like she said, I work at acompany called Goosehead
Insurance.
We're the largest independentbroker in the nation.
I work specifically withpersonal lines insurance and,
(03:20):
moreover, my clients are focusedon real estate investment and
development.
So what I'll be talking abouttoday is just kind of going over
some crucial things that mostinvestors or developers really
need to know when getting theirproperties covered.
I know insurance is kind of atopic that nobody really wants
to talk about or talks about awhole lot, so there's a lot of
gray area and I hope that, goingover this webinar today, we can
really cover a lot of thethings that most people need to
know and don't know.
Speaker 2 (03:50):
Okay, great.
So this is something thatsounds like it's going to be
very informative.
So let's start off asking whatour first question that we have
we have the first question ishow do we deal with the policies
that's different in thecoverage, different coverage as
far as the rental property andthen the owner-occupied property
.
Speaker 3 (04:00):
Yeah, of course.
So there's going to bedifferences whether it's going
to be a homeowner's policy or adwelling policy, which is going
to be more along the lines ofsomebody who's in real estate
investment and has those intheir portfolio.
So a dwelling policy is goingto be used for a home that's in
your portfolio, that you'recurrently renting out to
somebody that you're not livingin it yourself.
(04:23):
Ways that these kind of differfrom from homeowners are going
to be your different coveragelevels.
So, just going based off that,for your dwelling policies,
there's going to be differentlevels of dwelling policies that
you have, based on thecomprehensive coverage that
they'll they'll allow.
Speaker 2 (04:41):
There's going to be a dp1, dp2 um, allow, there's
going to be a dp1, dp2 and a dp3, right?
I think we had talked aboutthis earlier.
It's actually different levels.
Let me say this part soeverybody can understand.
Maybe you've heard these termsof non-owner occupied and then
owner occupied.
Owner occupied is like thehouse you live in.
(05:03):
You live, absolutely yes.
Non-owner-occupied is, like hesaid, when you rent it out.
But also, if your business isrenting it, you know it's paying
for it.
That's not where you physicallylive.
It's your business, though it'syours.
That's still considered, youknow, as a way of commercial.
Basically becausenon-owner-occupied and occupied
(05:25):
in a commercial building isconsidered commercial insurance
right.
Both of those requirecommercial insurance and not the
owner-occupied insurance, tomake sure you all understand
that.
So now you're going to breakdown the different levels of
those insurance.
Speaker 3 (05:39):
Yeah, and for dwelling policies.
So if it's just if you're areal estate investor that owns a
portfolio of differentproperties, your dwelling policy
that you don't live in, thatyou're renting out to a single
family, or if you have afour-family quadplex or
something like that, that won'tnecessarily require a commercial
lines.
That can be a personal linesand you can add comprehensive
(06:00):
coverage to that as well.
If, say, you're filing under anLLC or you have that in your
business portfolio, then youcould add the commercial policy.
Speaker 2 (06:07):
Let me ask you a question.
I'm sorry, harrison, to makesure I understand Now.
You're saying dwelling policy.
A dwelling policy is not thehouse I live in.
Speaker 3 (06:17):
No, ma'am, that would be a homeowner policy.
Speaker 2 (06:19):
That's called homeowner policy.
Speaker 3 (06:21):
Yes, ma'am.
And then?
Speaker 2 (06:21):
when you're dealing with a rent policy or rental or
non-owner, that's a homeownerpolicy.
Yes, ma'am.
And then when you're dealingwith a rent policy or rental or
non-owner, call it dwellingpolicy.
A dwelling policy, yes, ma'am,thank you.
Or, if you're a, developer.
Speaker 3 (06:29):
Even If you're a developer, we have vacant home
policies.
So that's, if nobody's livingin it.
Say, you just built a home.
I have a developer that I workwith now that just built four
homes that I've insured, andwhat that form is on, that's
going to be a vacant dwellingpolicy.
So nobody lives in it yet, buthe built it and he wants it
covered.
(06:55):
Same thing for if you'rebuilding a property and it's
under construction currently,then you would have a builder's
risk policy which will cover itfrom vandalism, theft, things of
that nature that can occurwhile it's either vacant, that
was just built, or still underconstruction.
Speaker 2 (07:01):
OK, so let's go back to this vacant policy.
So you're saying the vacantpolicy again.
We talked aboutnon-owner-occupied right and
that's when I need to get thatpolicy, when I have what a
tenant in there, then they movedout and now it's vacant, or
when should I get a vacantpolicy?
Speaker 3 (07:18):
Yeah, perfect.
So you got it pretty much right.
Anytime that you have aproperty in your portfolio or
maybe you're a developer and youjust built one and nobody's
living it, living in it at themoment there's going to be a
different coverage than if youwere to have tenants that would
be a dwelling policy and if youdon't have any tenants, then
it's going to be vacant becausethere's nobody living in it and
there's different coverages anddifferent requirements for those
(07:38):
insurances.
That, sitting down and talkingwith a professional like me, we
can go through and get you linedup with the right one that
sitting down and talking with aprofessional like me, we can go
through and get you lined upwith the right one.
Speaker 2 (07:49):
Right, so?
And then you mentioned that weneed builders policy is when we
were actually doing what rehabon the job.
I'm talking about a non-ownernow right.
Speaker 3 (07:59):
Right, of course, and it's still along the lines of
whether it's a portfolio or anew building.
Basically, if it's underconstruction, if you're
renovating it.
So if you do a lot of fix andflips and you're renovating the
property excuse me, and nobody'sliving in it at the moment and
it's under construction, you'regoing to have that builder's
risk policy.
Speaker 2 (08:14):
The builder's risk policy.
Okay, so now let's talk aboutthe difference between because
you and I have actually had thisconversation before.
So I was kind of stunned thenand we kind of talked about in
the office that there are somany different degrees of
insurance policies.
So I definitely want you toexplain that DP1, dp2, and DP3
(08:36):
policy.
If you could explain that to us.
Speaker 3 (08:39):
Absolutely, absolutely, yeah, and this is
pretty crucial too.
So so DP will stand for fordwelling policy, like we talked
about earlier, and there's threedifferent levels, just the same
as a homeowner's policy.
So the different forms we'llwrite on for a homeowner's,
which is the one you live in, isan HO1, ho2, ho3.
For dwelling policies followsthe same guideline, except it's
a DP1, dp2, dp3, respectivelyfor dwelling or for dwelling
(09:05):
policy, sorry.
So a DP1 is going to be on anamed perils basis, so it's
going to be for specific losses,so it's going to be the least
comprehensive coverage.
And a DP3, on the other hand,is going to be your most
comprehensive coverage, becauseit's going to be an open peril
policy, so it covers all perilsunless exclusively stated
(09:28):
otherwise.
So there has to be namedexclusions, otherwise it's an
accepted peril.
So an example of this that Iactually just had this week,
which is kind of funny we had aclient that was filing a claim
and what had happened was therewas a kitten that had lived in
(09:49):
their attic and had six babies,and they clawed through the roof
and left a hole in the roof andthe ceiling.
So they have an HO.3 policywhich would cover that peril,
because kittens are not statedas an exclusion on their policy.
So an HO.3 would cover that, orsorry, not an HO.3,.
A DP3 would cover that, orsorry, not an H03, a DP3 would
(10:10):
cover that.
That's the most comprehensive.
That's why you say it's open.
Speaker 2 (10:15):
Wow, I didn't know that.
So it's open because you havemore, like I said, a higher
coverage of things compared to,I guess you said, a DP1.
If I had that, it wouldn'tcover the damage with the cat.
Is that what you're saying?
Speaker 3 (10:27):
No, no, ma'am, because DP1 is going to be basic
, named perils.
So like wind fire, things likethat, like the basic ones, flood
damage or not flood damage,water damage, things of that
nature are going to be just thenamed covered perils.
Speaker 2 (10:45):
So let me ask you this so is it important to
really?
I guess we need to read ourpolicies to know what type we
have or what do we do?
Ask for that Because we onlylearn this terminology because
of you.
Speaker 3 (10:56):
Right, exactly.
Speaker 2 (10:57):
So what do we say?
We want to say, OK, I want tohave because.
What do we say?
Do I need to have the leastpolicy, the best policy?
What do we do?
And then we see what we'reactually getting.
So we'll know that that's whatwe got.
Speaker 3 (11:10):
Yeah.
So when say you're working withme, we write on DP3s and HO3s,
mostly we go with the mostcomprehensive approach just off
the bat, and that's what I dowith my business but say you're
not working with someone like me, what you're going to want to
ask from your agent is you'regoing to want to know the perils
on your policy.
A copy of your declarationspage or your application will
(11:32):
show you all your coverages onit.
You want to make sure you checkwhich form it is.
So if they're writing on a dp1,that's going to be the named
perils form.
That's going to be the leastcomprehensive.
A dp2 is just a little morecomprehensive and then the dp3
is going to be your most um so.
So, asking which form they'reriding on, uh, builders, risk
and vacant properties um, thosetypically are one policy form
(11:56):
that they'll write, so they'renot necessarily in order of the
dp1, dp2, db3 right, right, sothat's how they go, okay.
Speaker 2 (12:02):
Well, let me and I think see that's what I'm saying
.
That is good, that's greatinformation.
What I want to say now let'stalk about when we have okay,
this is what we get a lot.
As loan brokers, we deal withgetting money for real estate
investors, right, of course,sometimes real estate investors
as we say non-owner occupied arenot actually in it for the
(12:24):
business.
They were more like forced intolandlord ship, okay.
So the understanding that somepeople have and I want you to
correct us and let us know theright way is that I was living
in the house and I moved out andI never changed my insurance.
It was a homeowner policy.
So explain to us, how does thecoverage cover a loss for us If
(12:46):
I did as a rental incomecompared to if I did it as if I
lived there?
How does that work?
What's going on with that?
Speaker 3 (12:52):
Yeah, so so if you're not living in the home and you
have a homeowner's policy or or,uh, uh, an owned, uh dwelling
policy, where, where the owneris occupying it, um, and you
move out and you're not actuallyliving there and you have
tenants in there, there's a lotof coverages that your insurance
company, if they find that out,they just won't cover you,
(13:13):
they'll cancel your policy, evenif they decide that that's not
the risk they want to take on,because that's not the policy
that they sold you and it's wellworth it.
Especially so talking toinvestors specifically, or
people that end up renting outtheir house, even if it's in a
situation where they're forcedto do it, you still want that
(13:35):
rent money that you're gettingpaid.
Say, there's a loss thathappens and part of the house
burns down or there's a floodand you can't have your tenants
living there at the moment, eventhough it's still a homeowner's
policy.
If you're not living thereanyways and your tenants can't
have your tenants living thereat the moment, even though it's
still a homeowner's policy, ifyou're not living there anyways
and your tenants can't livethere and pay you that rent,
then you're not covered for lossof rents on a homeowner's
(13:57):
policy, whereas if you have anon-occupied dwelling policy and
you have coverage for loss ofrents in the event of a loss and
your tenants can't live thereand pay rent to you, you're
still covered for that loss ofincome that you'd get from if
they were still living there andrenting it.
Speaker 2 (14:12):
Really nice.
So basically what you're sayingand I think people don't
realize the insurance is thereto protect you in case you have
a disaster.
Right, you know calamities, butif you move out and you don't
(14:33):
change that insurance tocommercial what we call it
commercial insurance, you knowthen what happens is like he's
saying that you won't be able tomake those claims on it and a
lender doesn't want to do dealwith property is not adequately
protected, doesn't want to dealwith property is not adequately
protected Of course.
So even if you did not know andignorance is not any excuse of
the law that's the problem witheverything you still gonna have
to deal with.
They're not gonna do a claim onit because you've had a renter
in there, and that's the case.
(14:54):
So the thing is, we don't knowhow each insurance may do it,
but that's pretty much the lawon both of them all of them.
But we need to learn more aboutwhat type of policy we have
along with what situation wehave, because we need to check
accordingly Right.
Speaker 3 (15:10):
Absolutely.
Yeah, and it's all about youknow it seems like a headache to
go and switch possibly, yourinsurance or go through this or
go through that, but I promiseyou the headache from dealing
with a loss that won't becovered because you have the
wrong insurance is much greaterthan anything you'll have to go
through in switching it.
Speaker 2 (15:26):
Okay, and I agree that's definitely something we
did.
So I want to go through and askyou a couple of few more
questions.
One I wanted to ask you that wehad was that are there specific
endorsements or add-ons thatcan be particularly beneficial
for protecting real estateinvestment properties?
Speaker 3 (15:47):
Yeah, of course.
So just a few of theendorsements that you can add on
to an investment property orthe dwelling policy that you
have.
Just some of the common onesare going to be like what we
just talked about earlier theloss of rental income coverage.
So in most cases real estateinvestors have rental properties
(16:07):
and they're making theirpassive income on people renting
it out and in the event of aloss you want your insurance to
cover that income that is comingto you, but you're telling us
that if that's something we needto get added to our policy, for
sure, right to make sure, saythat that yeah, absolutely,
(16:29):
absolutely that's, and that'sthat's a really easy thing for
for me on my end to check tomake sure that that's on there.
um, my developer that I justworked with now I went through
with his lenders and checked allof it because sometimes through
different companies they can benamed different things.
But that's where working withsomeone like me comes in,
because I'll know what's what tomake sure you're covered for
that.
So going through and makingsure that's covered is really
(16:50):
easy for us to do here and itreally helps out a lot.
I mean, that's going to be oneof the main coverages that
you're going to want for yourproperty for sure if you're
going to want for your property,for sure if you're renting it
out.
Some other ones includelandlord liability coverages.
So if something happens to arenter while they're there and
you're held liable for something, the landlord is held liable.
You'll have protection as faras tenant injuries, property
(17:14):
damage, things like that.
There's also ordinance or lawcoverages, so this would be like
additional costs of rebuildingor repairing property to uphold
current building codes orordinances within the city that
have changed possibly since youlast built or since you've
acquired the property, and thensewer drain and backup and
(17:35):
equipment breakdown.
So those, respectively thoseare endorsements that can add
either sewer backup, so ifthere's a buildup of water and
it causes water damage, or say,your HVAC system breaks down,
you'll have coverage for thatand the repairs as well with
those endorsements.
Speaker 2 (17:51):
Right and see, there's no way we could remember
all those endorsements.
So, like you said, it'simportant if we reach out to you
because you know what it is andI guess, once you find out what
we try to do are you trying todo the insurance for to live in
the house or are you going torent it out Then you can
actually go through and prettymuch guide them on everything
they need to have.
Speaker 3 (18:12):
Absolutely.
Speaker 2 (18:13):
And that's what I say .
That's why I wanted to bringyou on, because Harrison
Harrison so you all would knowhe works for Goosehead but he
works with real estate investorsa lot the developers and
everything so he's a great go-toguy when you try to get your
insurance for your properties.
He can handle any type of dealsyou have.
(18:34):
Just bring them to him.
I think that's great.
That's why we wanted to haveyou here, because we talk to
people about the insurance atthe time we need it at the loan,
which sometimes, as I've calledyou, is incorrect and which
takes a lot of time away fromthe process.
So, coming to you and that's whyI'm glad you was willing to
(18:56):
come on, so people canunderstand insurance is going to
be a problem if it's a problem.
So absolutely everybody needsto try to take care of it.
And if they don't know what todo, especially if they start now
, even if you've been doingrental for a while, I think
you're a great person for themto reach out to.
Speaker 3 (19:12):
We correct, okay, absolutely yes, ma'am, I really
appreciate you having me on andeverything, um, and that, yeah,
that is the goal I mean.
There's just, even just fromworking in the industry, there's
a lot that I didn't know when Istarted and a lot that I've
learned over time, that I know alot of my clients.
I'll be talking to them andthey'll say, oh, I didn me in
(19:37):
your corner helping you out and,like you said, insurance isn't
a problem until until it becomesa problem.
And nowadays, with the market,um, just the way premiums are
now and underwriting and thingsof that nature, I write in all
50 states.
Um, me or my team writes in all50 states, and Texas especially
, um, Florida, California,obviously those places the
(19:58):
insurance market has has beengetting hectic and very
confusing.
So for for a loan officer or areal estate agent or even just
an investor to try and andfigure it out, it's beginning to
become very muddied waters andand what I've been able to do is
really help guide my clientsthrough the muddy waters that is
the insurance market now soit's been nice to be able to
(20:20):
help out and be a resource forsure, and what he's saying is so
true with the market, becauseeven with us, things are
changing.
Speaker 2 (20:29):
We try to, we're keeping up with everything and
that's what we do every day.
Imagine you who don't do it howmuch stuff changes from week to
week to month to month.
So it's good to have a teamtogether that can help you get
the information you need so youcan make intelligent choices
when it comes to your business.
And I think having someone likeHarrison on your team under
(20:49):
insurance of course us, becausewe're the money person but
definitely having someone likehim that has, you know, the
knowledge, the experience andthat he can tell you what way it
will work and which way itwouldn't, because he knows we
need that.
We need that.
So that is awesome that you canprovide.
So Harrison has his email.
That's up there atharrisonhassettgooseheadcom, but
(21:10):
his number's there too214-453-1764.
Guys, please reach out to him.
Stay tuned to us.
Wwtdj F-A-L-L-C.
Sign up for our email so thatwe can see your notices when we
have webinars like this andother things that are coming up.
We want you to be a part.
(21:30):
Harrison, we thank you forbeing our first guy and we love
what you had to say.
Thank you, thank you, thank youand if you have anything you
want to say to the audiencebefore we get off, yeah well,
first I just want to say thankyou very much for having me.
Speaker 3 (21:43):
I've enjoyed it.
It's been so great getting tojust spread knowledge in an area
that is very important,especially for the people
watching and then for theaudience.
I just want to say thank youfor your time.
Feel free to reach out to me atany time.
Feel free to reach out to me atany time.
I'm open whenever you guys wantto talk.
I'm ready to build some ofthese relationships between you
(22:04):
guys and really, you know, guideyou through the muddy waters
that is the market nowadays, andwe'll both help you out as a
team and get you where you wantto be.
Speaker 2 (22:10):
All right, thank you.
Thank you All right, and to therest of you all again, thank
you for attending, lookingforward to seeing you next time.
Until then, you all take care.
Speaker 1 (22:21):
We hope you enjoyed this episode of TDJ Equity
Funding Insiders Podcast.
If you'd like to be a guest orget in touch with us, please
visit our website attdjequityllcnet.
Forward slash podcast or emailus at podcast at
tdjequityfundinginsidersnet.
Until next time, take care.
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