Whether you rent or own, it’s important to cover your assets with proper insurance. Jared Bellmund told us how to protect ourselves in order to face uncertain times with more security.
Jared, a repeat guest on the Asheville Real Estate News podcast, says insurance is a mix of risk and reward. He recommends having a trusted advisor to steer you straight.
Instead of looking at insurance as a cost or commodity, Jared says it’s actually a need to protect your assets based on what you have. You may not learn about the real purpose of insurance until you need it, and it may be too late! Understanding deductibles is key to getting the right coverage.
Jared’s value is in the service he provides, while the insurance carrier’s value is in the product they sell. As an independent agent, Jared works with a variety of carriers. In this system, Jared is the advisor and educator upfront and an advocate and protector when a claim happens. He is in your corner, although he has responsibilities to the carrier and ethics, but he wants to ensure you get exactly what was in your contract.
Insurance and Real Estate
When insuring a home or property, insurance is based on either the actual cash value or the replacement cost.
- Replacement cost: the cost to get back what you had. For example, if your house burns down, this would be rebuilding what you had for the cost of insurance.
- Actual cash value: the price of the home minus depreciation. You don’t want this to be your home, because components deteriorate.
Mobile homes are an interesting case, since they are more easily destroyed. You have to think about how you want to be reimbursed. Get another mobile home or the cash to move on?
Ask questions. Know what risk you want to mitigate. If your aim is to protect tenants, you want the replacement cost. Just want to protect your investment? Actual cash value may work for you.
If you’re buying a home, don’t blindly trust your real estate agent when it comes to insurance. Since real estate agents have so much to deal with already, they often rush through the insurance process. Jared believes realtors have a responsibility to learn what insurance does for their client, and to inform them that the cheapest is not the best. Being pushed to the limits financially on a mortgage is not a good way to start your ownership journey — don’t forfeit protection for that important new purchase!
One good result of the pandemic, Jared says, is that realtor quality is improving. Those not as passionate have quit, and the existing agents care deeply about their clients and are doing the work and research to keep them protected.
When To Begin?
Start with insurance when you’re as young and healthy as possible. Focus on what you are trying to protect. Again, using a mortgage as an example — if you die, can your spouse continue to pay that mortgage or pay off the home? Insurance protection goes beyond the protection from your bank. They are worried about the property asset and their loan, while the insurance agent is worried about your quality of life. If you have a business partnership, get insurance to avoid messy negotiations with the spouse or children of your business partner.
Jared usually sees the urgency set in when his clients make life changes like getting married, having children, and/or buying a property. Basically, when you grow wealth or are getting ready to do so. Every stage of life has something new to protect.
Property Managers: Cover Your Assets!
Property owners, landlords, and investors want to protect their property. However, they also want to take care of their tenants.
Landlords should require renter’s insurance and talk to tenants about what you insure for them and what they should insure. If the home burns down and the tenant has no insurance, they have lost everything. Part of delivering good service and being a good landlord is talking to tenants about insurance. Also, look into liability. Tenants are inviting people in, and those are behaviors you could be liable for, so this is an additional buffer for property owners.
To property investors starting out with insurance, Jared recommends beginning with your own personal assets, making sure they’re protected. Talk to an attorney, CPA, and insurance agency about how to mitigate the risk of losing your own assets. This is important because when a claim is filed against your business, the attorney may come after your personal assets. To prevent this, set up an entity like an LLC to separate those assets.
Continuing the Conversation
To amplify and continue the great conversations he’s been having, Jared started a podcast called The Jared Bellmund Show. He gives a lot of credit to Andre at Pro 16 who works with him on the project.
His biggest takeaway is the importance of community, which expresses in different ways to different people. The things you do for others in your community really make a difference, can have a positive impact on your business. It goes beyond networking to true connections with others based on a common theme.
Find The Jared Bellmund Show anywhere you listen to podcasts!