Managing Risk

In Houston we had high winds a couple of weeks ago. This storm blew a tree over onto the roof of one of my rent houses. I called the insurance company and then I called my roofer to get a quote. I just recieved my check from the insurance company for $13k for a new roof. My quote for a new roof is $4k…It looks like it is time for a new car!!! I am just kidding I don’t think I want a $9k car. Maybe I can use it for a downpayment on another house, or replace all the dishwashers in all my houses, or repaint all the exteriors of all my other houses, or pay down some mortgages (never). You get the point. I have always come out ahead when calamity hit. Always keep insurance in place it pays.

We carry insurance (actual cash value policies) on our rentals for basically the amount we have invested in them for purchase and rehab (not market value). Did you get a couple high quotes to get a check for 13k vs 4k? We haven’t had to file a claim yet and something like you had or even a total loss is probably the only things I would file.

What about the earthquakes?
I am in So Cal, one property has a large mortgage, the other is paid for. Neither has the earthquake insurance. Nor does my own residence comes to think of it.
In case of a partial or a total loss, what are the consequences?

The adjuster used retail roofer rates. I don’t use retail professionals. My roofer is investor grade. If I went to the yellowpages and called a roofer that price would probably be very close to that $13,000 price.

I believe you should always properly insure. Insurance is almost never more that you can afford. The additional risk insurance is almost always pennies over basic insurance. If the rate is very high that means that you will probably use it more frequently. If you have a mortgage the bank will require you to have the insurance you need. For example if they have required you to have earthquake insurance like flood insurance means you really should have that insurance. If your house is paid off then you still should keep it insured. Why would you insure the house when the bank owns it but you won’t insure the house once you own it?

Good for you. I didn’t know if they would only pay on a submitted receipt amount or not. I knew of people years ago who filed car insurance claims based off three estimates and never fixed the car, but just pocketed the money. I think companies cracked down on that. I didn’t know if it was the same for residential claims or not.

They just write a check. I guess I could not replace the roof but then I would get water problems. That is never good.

The main things I would like you to takeaway are keep your property insured and use investor grade professionals not retail professionals.