Speaker 1: 0:13

Ready to get the inside scoop on equity funding? Tune in to TDJ Equity Funding Insiders Podcast for an in-depth look at what it takes to access financial capital and maximize your investments. Hear from experienced professionals, including bankers, underwriters, loan officers and industry experts, as they share their unfiltered stories and valuable lessons on securing funds.

Speaker 2: 0:42

Curing Funds. Welcome to our webinar giving power to the business owners webinar series, and today we have an insurance agent that is here with us to discuss the topics that we really need you all to understand of what's going on with them. Today's topic is dealing with insurance, dealing with real estate, investor property or just your property in general, because we do want to talk to you guys about the property area of True or Duh, but this is what we want you to know as well. I should have introduced myself. I got to start over. This is ridiculous. We're fine.

Speaker 3: 1:24

We're fine. We're fine, that was great, I think.

Speaker 2: 1:28

Hold on, hold on, hold on. I'm looking for a little bitty note. See, that's just it. If I wouldn't have made that doggone note, we wouldn't be doing this, but I like the note. Well, tim is back there. Oh, it's it out, and that's when it got and took it away from me. Stop looking down so much of what, okay. Okay, I can do this, me and him did this before, yeah we're good, we got good, we're good no pressure I'm not gonna worry about it just let it roll.

Speaker 2: 1:57

Okay, I got it Okay. Hello and welcome to TDJ Equity's webinar that is set up for giving power to the business owners. This is our webinar that we do with you guys throughout the next few months, and what we're going to give you is some information that will help you understand it more when it comes to funding. Hi, my name is Jacqueline Jackson and I'll be your host Today. We are having a special guest, which is an insurance agent that is actually giving us some information on getting property and how insurance actually plays a part of that. His name is Harrison Henson. He's with Go Goosehead Insurance and so at this time, we want to turn it over to him so that he can give us a little information about him going forward. Thank you for coming, harrison. We're glad you're here and if you would induce yourself and tell us a little bit about yourself.

Speaker 3: 2:58

Hi, thank you so much. Yeah, so, like she said, my name is Harrison Hess. I'm glad to be here talking to you guys. So, like she said, I work at a company called Goosehead Insurance. We're the largest independent broker in the nation. I work specifically with personal lines insurance and, moreover, my clients are focused on real estate investment and development. So what I'll be talking about today is just kind of going over some crucial things that most investors or developers really need to know when getting their properties covered. I know insurance is kind of a topic that nobody really wants to talk about or talks about a whole lot, so there's a lot of gray area and I hope that, going over this webinar today, we can really cover a lot of the things that most people need to know and don't know.

Speaker 2: 3:50

Okay, great. So this is something that sounds like it's going to be very informative. So let's start off asking what our first question that we have we have the first question is how do we deal with the policies that's different in the coverage, different coverage as far as the rental property and then the owner-occupied property.

Speaker 3: 4:00

Yeah, of course. So there's going to be differences whether it's going to be a homeowner's policy or a dwelling policy, which is going to be more along the lines of somebody who's in real estate investment and has those in their portfolio. So a dwelling policy is going to be used for a home that's in your portfolio, that you're currently renting out to somebody that you're not living in it yourself. Ways that these kind of differ from from homeowners are going to be your different coverage levels. So, just going based off that, for your dwelling policies, there's going to be different levels of dwelling policies that you have, based on the comprehensive coverage that they'll they'll allow.

Speaker 2: 4:41

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 about this earlier. It's actually different levels. Let me say this part so everybody can understand. Maybe you've heard these terms of non-owner occupied and then owner occupied. Owner occupied is like the house you live in. You live, absolutely yes. Non-owner-occupied is, like he said, when you rent it out. But also, if your business is renting it, you know it's paying for it. That's not where you physically live. It's your business, though it's yours. That's still considered, you know, as a way of commercial. Basically because non-owner-occupied and occupied in a commercial building is considered commercial insurance right. Both of those require commercial insurance and not the owner-occupied insurance, to make sure you all understand that.

Speaker 2: 5:36

So now you're going to break down the different levels of those insurance.

Speaker 3: 5:39

Yeah, and for dwelling policies. So if it's just if you're a real estate investor that owns a portfolio of different properties, your dwelling policy that you don't live in, that you're renting out to a single family, or if you have a four-family quadplex or something like that, that won't necessarily require a commercial lines. That can be a personal lines and you can add comprehensive coverage to that as well. If, say, you're filing under an LLC or you have that in your business portfolio, then you could add the commercial policy.

Speaker 2: 6:07

Let me ask you a question. I'm sorry, harrison, to make sure I understand Now. You're saying dwelling policy. A dwelling policy is not the house I live in.

Speaker 3: 6:17

No, ma'am, that would be a homeowner policy.

Speaker 2: 6:19

That's called homeowner policy.

Speaker 3: 6:21

Yes, ma'am. And then?

Speaker 2: 6:21

when you're dealing with a rent policy or rental or non-owner, that's a homeowner policy. Yes, ma'am. And then when you're dealing with a rent policy or rental or non-owner, call it dwelling policy. A dwelling policy, yes, ma'am, thank you. Or, if you're a, developer.

Speaker 3: 6:29

Even If you're a developer, we have vacant home policies. So that's, if nobody's living in it. Say, you just built a home. I have a developer that I work with now that just built four homes that I've insured, and what that form is on, that's going to be a vacant dwelling policy. So nobody lives in it yet, but he built it and he wants it covered.

Speaker 3: 6:55

Same thing for if you're building a property and it's under construction currently, then you would have a builder's risk policy which will cover it from vandalism, theft, things of that nature that can occur while it's either vacant, that was just built, or still under construction.

Speaker 2: 7:01

OK, so let's go back to this vacant policy. So you're saying the vacant policy again. We talked about non-owner-occupied right and that's when I need to get that policy, when I have what a tenant in there, then they moved out and now it's vacant, or when should I get a vacant policy?

Speaker 3: 7:18

Yeah, perfect. So you got it pretty much right. Anytime that you have a property in your portfolio or maybe you're a developer and you just built one and nobody's living it, living in it at the moment there's going to be a different coverage than if you were to have tenants that would be a dwelling policy and if you don't have any tenants, then it's going to be vacant because there's nobody living in it and there's different coverages and different requirements for those insurances. That, sitting down and talking with a professional like me, we can go through and get you lined up with the right one that sitting down and talking with a professional like me, we can go through and get you lined up with the right one.

Speaker 2: 7:49

Right, so? And then you mentioned that we need builders policy is when we were actually doing what rehab on the job. I'm talking about a non-owner now right.

Speaker 3: 7:59

Right, of course, and it's still along the lines of whether it's a portfolio or a new building. Basically, if it's under construction, if you're renovating it. So if you do a lot of fix and flips and you're renovating the property excuse me, and nobody's living in it at the moment and it's under construction, you're going to have that builder's risk policy.

Speaker 2: 8:14

The builder's risk policy. Okay, so now let's talk about the difference between because you and I have actually had this conversation before. So I was kind of stunned then and we kind of talked about in the office that there are so many different degrees of insurance policies. So I definitely want you to explain that DP1, dp2, and DP3 policy. If you could explain that to us.

Speaker 3: 8:39

Absolutely, absolutely, yeah, and this is pretty crucial too. So so DP will stand for for dwelling policy, like we talked about earlier, and there's three different levels, just the same as a homeowner's policy. So the different forms we'll write on for a homeowner's, which is the one you live in, is an HO1, ho2, ho3. For dwelling policies follows the same guideline, except it's a DP1, dp2, dp3, respectively for dwelling or for dwelling policy, sorry. So a DP1 is going to be on a named 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, because it's going to be an open peril policy, so it covers all perils unless exclusively stated otherwise. So there has to be named exclusions, otherwise it's an accepted peril.

Speaker 3: 9:34

So an example of this that I actually just had this week, which is kind of funny we had a client that was filing a claim and what had happened was there was a kitten that had lived in their attic and had six babies, and they clawed through the roof and left a hole in the roof and the ceiling. So they have an HO.3 policy which would cover that peril, because kittens are not stated as an exclusion on their policy. So an HO.3 would cover that, or sorry, not an HO.3,. A DP3 would cover that, or sorry, not an H03, a DP3 would 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 have more, like I said, a higher coverage of things compared to, I guess you said, a DP1. If I had that, it wouldn't cover 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 like that, like the basic ones, flood damage or not flood damage, water damage, things of that nature are going to be just the named covered perils.

Speaker 2: 10:45

So let me ask you this so is it important to really? I guess we need to read our policies to know what type we have or what do we do? Ask for that Because we only learn 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 to have because. What do we say? Do I need to have the least policy, the best policy? What do we do? And then we see what we're actually getting. So we'll know that that's what we got.

Speaker 3: 11:10

Yeah. So when say you're working with me, we write on DP3s and HO3s, mostly we go with the most comprehensive approach just off the bat, and that's what I do with 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're going to want to know the perils on your policy. A copy of your declarations page or your application will show you all your coverages on it. You want to make sure you check which 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 least comprehensive. A dp2 is just a little more comprehensive and then the dp3 is going to be your most um so. So, asking which form they're riding on, uh, builders, risk and vacant properties um, those typically are one policy form that they'll write, so they're not necessarily in order of the dp1, dp2, db3 right, right, so that'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 great information. What I want to say now let's talk about when we have okay, this is what we get a lot. As loan brokers, we deal with getting money for real estate investors, right, of course, sometimes real estate investors as we say non-owner occupied are not actually in it for the business. They were more like forced into landlord ship, okay. So the understanding that some people have and I want you to correct us and let us know the right way is that I was living in the house and I moved out and I never changed my insurance. It was a homeowner policy. So explain to us, how does the coverage cover a loss for us If I did as a rental income compared 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 owner is occupying it, um, and you move out and you're not actually living there and you have tenants in there, there's a lot of coverages that your insurance company, if they find that out, they just won't cover you, they'll cancel your policy, even if 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 well worth it.

Speaker 3: 13:24

Especially so talking to investors specifically, or people that end up renting out their house, even if it's in a situation where they're forced to do it, you still want that rent money that you're getting paid. Say, there's a loss that happens and part of the house burns down or there's a flood and you can't have your tenants living there at the moment, even though it's still a homeowner's policy. If you're not living there anyways and your tenants can't have your tenants living there at the moment, even though it's still a homeowner's policy, if you're not living there anyways and your tenants can't live there and pay you that rent, then you're not covered for loss of rents on a homeowner's policy, whereas if you have a non-occupied dwelling policy and you have coverage for loss of rents in the event of a loss and your tenants can't live there and pay rent to you, you're still covered for that loss of income that you'd get from if they were still living there and renting it.

Speaker 2: 14:12

Really nice. So basically what you're saying and I think people don't realize the insurance is there to protect you in case you have a disaster. Right, you know calamities, but if you move out and you don't change that insurance to commercial what we call it commercial insurance, you know then what happens is like he's saying that you won't be able to make those claims on it and a lender doesn't want to do deal with property is not adequately protected, doesn't want to deal with property is not adequately protected Of course.

Speaker 2: 14:40

So even if you did not know and ignorance is not any excuse of the law that's the problem with everything you still gonna have to deal with. They're not gonna do a claim on it because you've had a renter in there, and that's the case. So the thing is, we don't know how each insurance may do it, but that's pretty much the law on both of them all of them. But we need to learn more about what type of policy we have along with what situation we have, because we need to check accordingly Right.

Speaker 3: 15:10

Absolutely. Yeah, and it's all about you know it seems like a headache to go and switch possibly, your insurance or go through this or go through that, but I promise you the headache from dealing with a loss that won't be covered because you have the wrong insurance is much greater than 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 ask you a couple of few more questions. One I wanted to ask you that we had was that are there specific endorsements or add-ons that can be particularly beneficial for protecting real estate investment properties?

Speaker 3: 15:47

Yeah, of course. So just a few of the endorsements that you can add on to an investment property or the dwelling policy that you have. Just some of the common ones are going to be like what we just talked about earlier the loss of rental income coverage. So in most cases real estate investors have rental properties and they're making their passive income on people renting it out and in the event of a loss you want your insurance to cover that income that is coming to you, but you're telling us that if that's something we need to get added to our policy, for sure, right to make sure, say that that yeah, absolutely, absolutely that's, and that's that's a really easy thing for for me on my end to check to make sure that that's on there.

Speaker 3: 16:34

um, my developer that I just worked with now I went through with his lenders and checked all of it because sometimes through different companies they can be named different things. But that's where working with someone like me comes in, because I'll know what's what to make sure you're covered for that. So going through and making sure that's covered is really easy for us to do here and it really helps out a lot.

Speaker 3: 16:52

I mean, that's going to be one of the main coverages that you're going to want for your property for sure if you're going to want for your property, for sure if you're renting it out. Some other ones include landlord liability coverages. So if something happens to a renter while they're there and you're held liable for something, the landlord is held liable. You'll have protection as far as tenant injuries, property damage, things like that. There's also ordinance or law coverages, so this would be like additional costs of rebuilding or repairing property to uphold current building codes or ordinances within the city that have changed possibly since you last built or since you've acquired the property, and then sewer drain and backup and equipment breakdown. So those, respectively those are endorsements that can add either sewer backup, so if there's a buildup of water and it causes water damage, or say, your HVAC system breaks down, you'll have coverage for that and 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's important if we reach out to you because you know what it is and I guess, once you find out what we try to do are you trying to do the insurance for to live in the house or are you going to rent it out Then you can actually go through and pretty much 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 bring you on, because Harrison Harrison so you all would know he works for Goosehead but he works with real estate investors a lot the developers and everything so he's a great go-to guy when you try to get your insurance for your properties. He can handle any type of deals you have. Just bring them to him. I think that's great. That's why we wanted to have you here, because we talk to people about the insurance at the time we need it at the loan, which sometimes, as I've called you, is incorrect and which takes a lot of time away from the process.

Speaker 2: 18:52

So, coming to you and that's why I'm glad you was willing to come on, so people can understand insurance is going to be a problem if it's a problem. So absolutely everybody needs to try to take care of it. And if they don't know what to do, especially if they start now, even if you've been doing rental for a while, I think you're a great person for them to reach out to.

Speaker 3: 19:12

We correct, okay, absolutely yes, ma'am, I really appreciate you having me on and everything, um, and that, yeah, that is the goal I mean.

Speaker 3: 19:18

There's just, even just from working in the industry, there's a lot that I didn't know when I started and a lot that I've learned over time, that I know a lot of my clients.

Speaker 3: 19:30

I'll be talking to them and they'll say, oh, I didn me in your corner helping you out and, like you said, insurance isn't a problem until until it becomes a problem. And nowadays, with the market, um, just the way premiums are now and underwriting and things of that nature, I write in all 50 states. Um, me or my team writes in all 50 states, and Texas especially, um, Florida, California, obviously those places the insurance market has has been getting hectic and very confusing. So for for a loan officer or a real estate agent or even just an investor to try and and figure it out, it's beginning to become very muddied waters and and what I've been able to do is really help guide my clients through the muddy waters that is the insurance market now so it's been nice to be able to help out and be a resource for sure, and what he's saying is so true with the market, because even 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 how much stuff changes from week to week to month to month. So it's good to have a team together that can help you get the information you need so you can make intelligent choices when it comes to your business. And I think having someone like Harrison on your team under insurance of course us, because we're the money person but definitely having someone like him that has, you know, the knowledge, the experience and that he can tell you what way it will work and which way it wouldn't, because he knows we need that. We need that. So that is awesome that you can provide.

Speaker 2: 21:05

So Harrison has his email. That's up there at harrisonhassettgooseheadcom, but his number's there too 214-453-1764. Guys, please reach out to him. Stay tuned to us. Wwtdj F-A-L-L-C. Sign up for our email so that we can see your notices when we have webinars like this and other things that are coming up. We want you to be a part. Harrison, we thank you for being our first guy and we love what you had to say. Thank you, thank you, thank you and if you have anything you want to say to the audience before we get off, yeah well, first I just want to say thank you very much for having me.

Speaker 3: 21:43

I've enjoyed it. It's been so great getting to just spread knowledge in an area that is very important, especially for the people watching and then for the audience. I just want to say thank you for your time. Feel free to reach out to me at any time. Feel free to reach out to me at any time. I'm open whenever you guys want to talk. I'm ready to build some of these relationships between you guys and really, you know, guide you through the muddy waters that is the market nowadays, and we'll both help you out as a team and get you where you want to be.

Speaker 2: 22:10

All right, thank you. Thank you All right, and to the rest of you all again, thank you for attending, looking forward 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 or get in touch with us, please visit our website at tdjequityllcnet. Forward slash podcast or email us at podcast at tdjequityfundinginsidersnet. Until next time, take care.