Discover the ins and outs of insurance in the world of real estate, as we chat with Rebecca from Central Illinois. Learn how she navigated the complexities of insurance for her historic wedding venue and Airbnb cabin, making sure she had the right policies in place to protect her investments.
We dive into the specifics of different insurance policies needed for a wedding venue, an Airbnb, and a rental property, and the importance of keeping your agent in the loop on the exact details of your property and its intended use. Rebecca also shares her experience working with independent agents and brokers who can help you find coverage for high-risk activities like snow plowing, roofing, and tree trimming.
Lastly, we touch on the necessity of event insurance for couples hosting weddings at a venue, and how this extra layer of protection can save you from headaches in case of unexpected cancellations or incidents. You won't want to miss this valuable advice on securing the right insurance policies to safeguard your assets, whether you're a seasoned real estate investor or just getting started.
Thank you to Podium for the awesome assistance with the transcript!
Discover the ins and outs of insurance in the world of real estate, as we chat with Rebecca from Central Illinois. Learn how she navigated the complexities of insurance for her historic wedding venue and Airbnb cabin, making sure she had the right policies in place to protect her investments.
We dive into the specifics of different insurance policies needed for a wedding venue, an Airbnb, and a rental property, and the importance of keeping your agent in the loop on the exact details of your property and its intended use. Rebecca also shares her experience working with independent agents and brokers who can help you find coverage for high-risk activities like snow plowing, roofing, and tree trimming.
Lastly, we touch on the necessity of event insurance for couples hosting weddings at a venue, and how this extra layer of protection can save you from headaches in case of unexpected cancellations or incidents. You won't want to miss this valuable advice on securing the right insurance policies to safeguard your assets, whether you're a seasoned real estate investor or just getting started.
Thank you to Podium for the awesome assistance with the transcript!
0:00:04 - Speaker 1
All right. Well, welcome back to this week's episode, mvp real estate podcast, episode 13. We got Rebecca here from the central part of Illinois doing insurance, and insurance is one of those facets of real estate that some people neglect, mainly maybe because they don't understand fully what is needed. But that was one of the learning curves, that was the steepest for me getting into this. But what policies are needed on a build, on a home, on a rental? they're all different policies And Rebecca mentioned she does Airbnb, so we'll throw in that one on top of it because that's a different policy. So this show is going to be revolving a lot about insurance, the insurance side of real estate, and we got the expert, rebecca, here with us. So thanks for giving us the time. I appreciate it. We're finally in like the 80s here in the middle, so celebrate.
0:01:05 - Speaker 2
Yeah, yeah, it's supposed to get up to 90 here today, So yeah, it's finally summer.
0:01:12 - Speaker 1
I know.
0:01:13 - Speaker 2
I am ready.
0:01:14 - Speaker 1
I know just enough time to put the winter coats away, just to pull them out next month and prep.
0:01:21 - Speaker 2
Right.
0:01:25 - Speaker 1
So, Rebecca. I guess we will start out, give us a little background of where you came, either personally or professionally, to lead you into where you are now owning Airbnb's, owning the wedding venue and working full time in insurance.
0:01:44 - Speaker 2
Still, Well, my grandparents owned this farm. They bought it in 1979. It's a historic home that's on the National Register of Historic Places. They actually went through the process to place it on the National Register in the 1980s And they never lived here but they loved the home and the property out there. And then I had a couple of cousins that got married over the years and we did a lot of family gatherings and events there.
So anyway, after they passed away, i bought the property and said what am I going to do with it? I bought it for sentimental reasons And then kind of said, well, if we've had a few weddings here, then I could open it up as a wedding venue and we'll go from there. And then there was a there's a cabin on the same piece of property And so I put that on Airbnb and BRBO And so I rent that out that way. And then in the process of that, like I changed careers to being an insurance agent. So I was working a really physical job and kind of hurt my leg And so I couldn't do the physical stuff and going through the process of getting insurance for the wedding venue, insurance for the Airbnb, i learned a lot. And then, yeah, my insurance agent asked me if I wanted to come work here. So here I am.
0:03:21 - Speaker 1
That is an awesome ride And there's going to be a lot to unpack with everything you have going on. But I'm guessing it's all going to guide back to this insurance question, because I know I have questions on those. So the wedding venue, I would guess, would be a commercial policy right.
0:03:42 - Speaker 2
Yes, yes, it is a commercial policy. It's a what they call a commercial policy.
0:03:57 - Speaker 1
Sorry, we had some audio feedback there.
0:04:02 - Speaker 2
That's okay. That's okay. So commercial package policy has general liability Property in there, So kind of package one. What's why they call it the commercial package?
0:04:18 - Speaker 1
Yeah, That would be along the same lines as if you had if you own an apartment complex and you had to get that. Would it be the same umbrella package Or because it's more of like a store run?
0:04:33 - Speaker 2
Yeah, it's similar. It's similar My insurance, the way my policy is written, the it's pretty standard that the event couple the couple hosting the event has to get an event policy to cover their event. I have liability insurance that covers me, the event liability policy, which is almost a standard for a lot of the venues. the event liability policy gives extra liability for the wedding couple or whoever is hosting that at the location. So then we're doubling up on insurance by if they actually needed to use that liability. it's really good to have. It's one of the things like you don't and how you actually have to use the insurance. you don't realize how much insurance you need.
0:05:50 - Speaker 1
Line item that I hate seeing go out every month, but I know it's needed. I didn't know the fact of. so you've got your own general liability and then they have their own event insurance, which in my head, being a landlord, we have our owner's policy on the property and then they have their renters policy That would cover all of their belongings inside, where mine would cover the house itself. I didn't even think that there would be a party type of insurance to that.
0:06:24 - Speaker 2
Yes, There is. It's an event policy. When you do that, you go through and say how many people are going to be there, what you're going to be doing, So those things all factor into the cost. They're between like $200 to $1,000 for the event liability policy. But it's really good because a lot of them have insurance built into it. So if you have to cancel the event you would get all your deposits and stuff back.
0:07:03 - Speaker 1
Okay, That is important because if you're trying to do an outside wedding and there's some bad rain or we actually had one of my friends paid a wedding planner and this is where I'd be curious where that would fall They'd paid a wedding planner who, in the midst of planning their wedding, the company went bankrupt and they should have been paying deposits. Oh, no, they hadn't, but they had paid the wedding planner, so I don't.
0:07:30 - Speaker 2
Oh no.
0:07:32 - Speaker 1
I know It turned out great. Their wedding was amazing. It was down in San Diego.
0:07:36 - Speaker 2
Oh great.
0:07:37 - Speaker 1
It all went well, but I mean there was definitely some stressful days leading up to it.
0:07:44 - Speaker 2
Oh gosh For sure That would be super stressful And that you know it's just like buying travel insurance. You know if you have to cancel, then the travel insurance kicks in and, you know, reimburses you for that stuff. So the event liability policy does the same thing for the events. If you have to cancel for some reason, you know which, who knows what could happen in between.
Yeah, you know so. Then it would reimburse you for the deposits And, and you know, if you had fees that you had to pay for canceling, it would pay those too. So it's not just like if somebody trips and falls and gets hurt at the event, it also covers for other things too.
0:08:26 - Speaker 1
Yeah, the all the rainy day funds. That's where it's needed.
0:08:31 - Speaker 2
Yeah, exactly. You don't know what's going to pop up, yeah.
0:08:33 - Speaker 1
So many different things to be planned. I don't even know half of them. You would know them. That could go wrong in the planning process.
0:08:41 - Speaker 2
And I think like one of my favorite things about the insurance stuff is hearing the horror stories of how people use their insurance, like the weird, crazy thing that happened and how the insurance policy covered that And it's. you would not believe all the crazy things.
0:09:03 - Speaker 1
Yeah.
0:09:04 - Speaker 2
That happened. you know that the insurance covers, so you know it's it kind of like gives you like an idea of we like how it is to be properly insured. Like don't cut the corners. You know when you cut the corners you're cutting yourself out of coverage. You know.
0:09:28 - Speaker 1
Yeah.
0:09:29 - Speaker 2
Like, like umbrella, an umbrella policy covers, covers everything.
So an umbrella policy if your regular insurance doesn't cost, then the umbrella policy will kick in and pay for the rest of it. So the one example on there that I'd heard that made the umbrella policy really makes sense and like it's needed. So this homeowner had a family dinner and he was like you know it's a lot of work, you know we've got a bunch of people And a bunch of people over there eating and they're all kind of standing around in the kitchen as she's finishing up the meal And she pulls a ham out of the oven and it was in a glass dish and as she took it out of the oven the glass dish exploded, glass everywhere And it fell on one of her guests feet and it was permanently disabled from this ham falling on her feet. Yeah, i know. So then, yeah, the homeowner's paying out like $300,000 of liability, but in that instance it did not cover all of it. So that's when the umbrella policy kicked in and finished paying for the liability from paying them out of the oven.
0:11:00 - Speaker 1
So anyway, wow A ham.
0:11:03 - Speaker 2
Yeah, yeah, yeah. And you said that was right, who would have thought?
0:11:12 - Speaker 1
you said that was at your, your wedding venue or That was a resident.
0:11:19 - Speaker 2
That was at a phrase they tell you well, for insurance. You know Not my story, my story, that somebody else's great One. Again, an example of why he properly insured is William.
0:11:36 - Speaker 1
Yes, yeah, i'm glad that was not your story. That's that would be awful In with with your That's not my story.
I know, in with your, your own properties. so your wedding venue and your Airbnb's seeing as you are, you know and you've heard the horror stories of what could happen, what could fail or what could go wrong Are these things that you mandate? are I to rent our wedding venue? You need to get your own insurance. to rent this Airbnb, you need to get your own insurance. Is that things that are written in your contracts?
0:12:12 - Speaker 2
It's in the contract for the wedding venue. The wedding venue. They have to get Their event liability policy. Yes, the Airbnb I've got. I've got a commercial policy for the Airbnb That specifically states that it is for short-term rentals. It's a lot of people just have like a regular homeowners, but if you were to actually have a claim and they find out that you're doing short-term rentals, it may not be covered.
0:12:45 - Speaker 1
Yeah.
0:12:47 - Speaker 2
You know, and that's one of those things like you don't know File the claim and then they not only could they just cover you, they could cancel your policy. And then you are In a bad situation where you're trying to find insurance and because you've policy canceled, then you're unable to get new insurance. It makes the tricky. And then not only that, but then you have a claim that you're trying to paper out a pocket.
0:13:14 - Speaker 1
Yeah, Yeah, i just heard a story recently that he One of acquaintance that I have owns a rental property on the east coast and while he wasn't living there he was renting it out and it came to be a move out period and there was some damages and he asked me if he should contact his insurance company and Said, well, do you think they would work with you? And he said yeah, and I said, well, then, that's probably a good option, but do they know that it's a rental? He was like no, now I was like.
I don't think they're gonna help me.
0:13:49 - Speaker 2
I'm pretty sure you're gonna drop your policy, so I would not touch that one.
0:13:52 - Speaker 1
Yeah, yeah, and that wasn't even a short term, that's a. that's a lot of people who are not going to be able to get a new insurance, A long term year lease but it's a completely different policy.
0:14:02 - Speaker 2
It's a completely different policy. You have your standard homeowners policy, and that is when you live in the home, and then you have what's called a landlord policy. A landlord policy is if you're renting it out for a long term rental and then Then you have like commercial and so short term rentals All underneath that commercial category.
0:14:28 - Speaker 1
So okay.
0:14:30 - Speaker 2
And it's a different, a different type of risk for the insurance company. You know, having multiple people in and out is different than having someone living their long term and having the homeowner live. There's one policy versus having some people you don't know live there. Even if they are relatives, it should still be a rental policy.
0:14:50 - Speaker 1
Absolutely, and it's all about covering yourself and covering the whoever's living in that space. It's, it's weird how, how, i guess precise, they can get down with their risk in terms of how they categorize their policies, because I, we actually own, we've got our our homeowner policy with the house that I live in, we've got all of our landlord policies, but then it gets into like inland marine. I didn't know was a thing. When you rent heavy machinery, you need to ensure that as well. Um, builders risk, like when we're renovating a house, that's not a homeowner's policy.
No construction insurance policy right In all of these, and then we've got our, our labor, we've got our uh, what would you call that general casualty?
0:15:44 - Speaker 2
Yeah, general casualty or workers comp.
0:15:47 - Speaker 1
Yeah.
0:15:48 - Speaker 2
Yeah, it's really important to explain to your agent exactly what you're doing with the property, just to make sure that you're properly insured and like like the inland marine.
You'd think that's like a boat or something, but it is actually um Access property that you own. That's on your property at your building. Um, so Basically they say anything that is over $3,000 Should be listed as an in inland marine policy. Um, You can add those to your homeowner Um you list them out as a schedule on your home or you I'll see to cover just the.
0:16:38 - Speaker 1
Yeah, and that in the Marine actually covers our in closed trailer with all of our tools, which I didn't know. that that's what that would have thought.
0:16:48 - Speaker 2
Yeah, there's, those tools are expensive.
0:16:53 - Speaker 1
Yes, yeah, and it was nice. we have a whole inventory list for them, so we gave exactly what's in it with the dollar amount that it was purchased. so like at least we feel safe with that one, but hopefully you don't have to use it.
0:17:07 - Speaker 2
Yeah, exactly, Hopefully you never have to use it. Yes.
0:17:10 - Speaker 1
I know It. I actually had a big, big question for you and I missed my plug on that one When you were talking about Airbnb is coming in as a commercial policy And then you're explaining your homeowner and your landlord In real estate residential is four units or lower. Is it like that in the insurance policy world as well? so at our fifth unit. So if we have an apartment complex of five units, would we then taper into that commercial zone or is that kind of an influx period of their best guess?
0:17:50 - Speaker 2
Um, i it's more of what it's being used for. it's not so much how many is it is if. if it's being used for rental, so, um, especially if it's a duplex, that's one thing So like, just like one other unit, it would be kind of fall underneath of a homeowners policy. You might be able to get away with the homeowner's policy if you just have one unit And once you go over, that really should be a commercial policy. So my own home that I live in is a is a commercial policy because I have it's technically three apartments and I'm living in one apartment and then the other two are short term rentals. Um, again, it's a commercial policy. I have a renters policy for my own stuff because underneath that rent, that commercial policy, your property isn't covered. so I have to have the renters policy to cover my property in my own home.
0:19:01 - Speaker 1
That is funny.
0:19:03 - Speaker 2
Yeah.
0:19:04 - Speaker 1
So I actually had that set up at this because the way that it's set up, the the company owns the residents and I'm renting from them And I had it set up that way as well, where I had a renters policy and homeowners But I work with I don't know if I can mention the name, but I work with an insurance company that actually said I don't need to do that. Is that correct on your expertise, or would you have kept it as a rental?
0:19:31 - Speaker 2
I would have kept it as a rental, especially if you don't own it. I mean, if the company owns it, you're kind of in a gray area there. I mean you. Ultimately it comes down to your agent and how the end the underwriting of the actual policy. Because I mean just because what I'm saying doesn't necessarily mean that it's the same across the board for every single company.
Each company has their own underwriting guidelines that may or may not be the same. So I mean and and you know, that's why there's multiple insurance companies. I work for an independent agent, so, like when somebody comes to me for insurance, i've got a few different companies I can write with and it kind of depends on their needs which company I will write them with. We've got one company that's great for ensuring homes, but they only cover up to $450,000. Once the home value goes over $450,000 and I have to write them with a different company. So I mean each, like I said, it depends on the underwriter and the underwriter guidelines. If your underwriter knows what's going on, then it's probably great.
0:20:52 - Speaker 1
Yeah but, I appreciate you bringing that up about like you are working for an independent, so you'd be more of a insurance broker where you can go into different companies and grab policies. It would be on the real estate side as you're going to buy a home and you go to your local town bank, they're going to lend you from there what they are able to lend from. If you go to a mortgage broker, they can go and shop different carriers and give you the best one that comes available. So there are two different worlds. you can either go to your insurance company like a McCall USA or State Farm, or you can go to an insurance broker like yourself and you can pull from different policies. Is that correct?
0:21:45 - Speaker 2
Yeah, yeah, if you go to, for instance, state farm, they're going to give you one quote. If you come to an independent agent or a broker, I will probably give you at least two quotes, maybe three, depending Rare instances. There's only one. There might be only one option for what you're doing. Some of the high risk things, like snow plowing, is a high risk thing. You want to think about it being high risk, but it is. Roofing is kind of a high risk, tree trimming.
0:22:21 - Speaker 1
Yes.
0:22:22 - Speaker 2
They. Basically, if it involves like a chainsaw and you could get hurt, that's probably going to be a high risk thing. So you have limited options on the higher risk markets than you would for like just a regular homeowners. So yeah, it was a doozy trying to get that sense to you, but yeah, no, it does make sense.
0:22:45 - Speaker 1
We had to switch. We got we were using a company for our liability, workers comp liability insurance and we got dropped. We didn't have a claim, we didn't have any lights, they just dropped us. and I called and I said, oh, why did I get dropped? They said, oh, we just don't cover that anymore.
0:23:05 - Speaker 2
Yep.
0:23:06 - Speaker 1
I mean, this is a company that they market, that they go into the trades, so plumbers, electricians, carpenters, like that's what they cover and they would not cover me. So I had to go online to the wild wild West of trying to find insurance policies. So, I went to a broker because for me, i don't I don't really know where I want to go.
0:23:32 - Speaker 2
Honestly, there's a lot of stuff going on right now about, like you know, direct policies, especially for the auto. Go online and fill out the forms all yourself and get your own auto insurance and it's cheaper And, yes, it is cheaper but you then lose the opportunity of having an agent to advise you like the best coverages for your vehicles. So if if you know insurance, doing it yourself is fine. If you don't know insurance, you could be you could have problems and like we've taken some customers that have had the direct auto policies and because when they had an accident then either they had problems with coverages, they had problems getting ahold of the insurance company and going through the claims process and stuff. So those are the steps where you really need to have an agent to you know advising you coverages and and if you do have a claim, the agent can help you in that process and you know you're not out in the wild West alone trying to figure it all out on your own.
0:24:44 - Speaker 1
Yes, because there's a bunch of forms in, especially when it gets more complicated. when you've got a company with your expenses and your incomes coming through in assets that you need to claim, it gets busy and it gets complicated Working with that agent. like you were saying, if you don't know insurance, it might be more favorable to get a little bit more expensive of a policy but get the right one. So when our policy got dropped, that was kind of a reset moment. Yes, it was frustrating. Yes, i got super frustrated not being able to find a policy. We applied for some. we got denied again, but it was nothing to our fault, like we didn't have anything that was negative, it was just risky.
And with that we got to sit down with an agent. we got to go through, i got to talk and find out more about it in Lynn Marine policy, which was great. We had some more employees join on Once. we got to update all of our information and the weird thing was is if we would have had a claim yeah, we were operating I don't think most of it would have been actually processed through the insurance. I don't think they would have taken it just because information was off. So for me. I look on the bright side and like everything's done correctly, which is great.
0:26:10 - Speaker 2
So anyway, it's important to go through with an agent and periodically review your policies, even if you're not changing, just to make sure that nothing has changed and you forgot to tell your agent about. You would be surprised how many people change things and don't even realize that it's important. On the insurance, you know when you're switching out employees, you're buying new equipment.
0:26:39 - Speaker 1
Yep, that was our big one.
0:26:42 - Speaker 2
Yeah, that tool inventory thing that you mentioned. I mean, how often do you buy new tools for the job site and don't even think about updating the insurance for it? Anything over $3,000 should be listed out separately on your policy. So if you're buying something that's over $3,000, that should be a trigger in your head to update your insurance. But yeah, you know, when you sell it to a lot of times you sell stuff like that you don't even think about updating the insurance. So, like you know, once a year when you get those renewal paperwork, go through it. and you know, i mean, even if you don't do it once a year, like maybe every five years, Yes you'd be surprised how many people go and they're like Oh yeah, i bought that property, i sold that property.
And farmers especially will do that. You know the five pieces, they'll sell pieces. Or they're renting farm ground and selling farm ground, you know, and they don't think to update their stuff until you know, oh, that paperwork comes in the mail and they're like Oh yeah, i'm not firming that part anymore.
0:27:54 - Speaker 1
Yeah, I forgot about the agricultural because we had one. I had one deal where they bought property and then they went to the township they rezoned it as agricultural. So they had to get a different policy for the agricultural that they were renting out Aside from their policy.
0:28:13 - Speaker 2
Yes, that's a farm policy. When you have acreage and you're like, even if you just like they're mowing hay on your property, it doesn't seem like it's farm. But it's a different type of risk. You know, to the insurance company that's a different type of risk to be doing farming activities on your property.
0:28:34 - Speaker 1
And they needed to know, like, what was being grown and how many times it was going to be plowed, like they wanted to know what was going on. And that was my eye opening moment of when you talk to insurance. It would be more advantageous just to be fully honest with what's going on, because they're going to lead you to the right position.
0:28:56 - Speaker 2
Because, number one, they're going to make sure that you're good at the bright coverage. You know the right coverage. that's right for you. But the flip side of that point is when you have that claim, then you're going to have the right coverage so that it's covered. Yes, because I mean you get yourself into situations where if the insurance company doesn't know that's going on and then something happens, then that's not covered And then, then you're on the hook for that liability or whatever.
Whatever happened, yeah, the auto. To go back to the auto side state minimum coverage for your auto is not enough. I mean it is not enough. The Illinois state minimum is $25,000 of coverage. Tell me which vehicle is $25,000 of value? I mean most of these vehicles are way more than 25,000, way more than 25,000.
Like, some of these trucks are like $80,000. So if you have $25,000 of coverage, you total out somebody's truck and it's worth $80,000. The price difference doesn't disappear. They come after you for that entire amount of money. And then you know we try to write 100,000 here in the office because you know that's just and even that's not going to cover if you hit a Porsche or something like that, But so yeah, it'll cover you for a majority. Yeah, your likelihood of hitting a Porsche is a lot less than it is hitting an $80,000 truck.
0:30:39 - Speaker 1
I mean you know true, true, and the one thing with the being transparent, being open with insurance, you're going to get nose And I'm I don't want to be like offensive to you being in the industry, but insurance companies love no, and I found that on the front and the back end. But I would much rather have no, we're not going to cover you. If you say no, we can't cover that, then no, we're not going to take that claim. Because if, if something goes wrong and they tell me no, you got a panic moment. If you say no, we can't cover you, move on and go to the next person. Someone's going to cover you. But take the no there, do the extra due diligence to get the right policy so that you don't get to know on the back end when you need a yes.
0:31:27 - Speaker 2
I agree 100%, because you don't want to be in the situation where the claim is a no for sure.
0:31:33 - Speaker 1
Yes, that is the worst type of no from an insurance company. So take the headache, take the lumps on the front end and find the right policy, and if you have to go to an agent, strongly recommend doing that Yeah just to make sure.
And with your. I know we're running out of time here a little bit, but we didn't really touch on your Airbnb stuff because I love, I love Airbnb's but my municipality that I live in does not allow them, So I'm like living vicariously through guests. So, from what I, from what I know, Airbnb has a policy same with VRBO. It won't cover, kind of like the situation you were talking. If you get a $25,000 policy, It probably won't cover everything. So you should have like a secondary policy set up. Is that correct?
0:32:30 - Speaker 2
Yes, yes.
0:32:32 - Speaker 1
It appears we lost Rebecca the guest. We had some technical issues getting into the show But hopefully we can get a wrap up. We'll get some contact information for her Because insurance is a big, big part of your business if you're getting into real estate. I know we only touched on a brief little bit of the insurance world But, like I said, i think for our company alone we've got well over 10 different policies for everything we have to cover And I know that even if you don't own a bunch of real estate and you just have your home and auto policy, you might get away with what she was saying just going online and getting your quote. But if it gets complicated, make sure you do your due diligence, you're transparent with the insurance companies, because it's only going to help out on the back end when you need it.
Hopefully we can get Rebecca back on and talk about that Airbnb, because I know that industry is getting bigger and bigger every day And I know I have questions on insurance policies on that one. So we'll look at getting her back so she can finish up with the Airbnb's. But hopefully everybody took some little pieces of info and some nuggets from the show on their own policies or their own business that they've got running and implement them. But we'll get her contact information. We'll put that in the show notes. Thanks for tuning in And we'll see you next week.
0:34:00 - Speaker 2
See ya.
Transcribed by https://podium.page