In the United States, there are over 1.3 Million fires per year. While the death toll on a percentage basis is low, with around 4,000 deaths per year, these fires cause more than $25 billion in property and other damage per year. Residential properties see their fair share of these same fires, close to 400,000 annually in fact. About half of these fires are caused by cooking, another 10% or so from heating, 7% from electricity, and the rest from other causes such as carelessness, open flame, or appliances. Only 4% of residential fires are intentional, and less than 2% are natural. This breakdown shows us that almost all fire damage occurrences are the result of entirely regular events. All of us cook, all of us heat our home. Every day (and nearly every moment), we seem to use electricity. Many or all of these same actions use appliances. All of these actions are normal, and as a result, we are all at risk, even if we do nothing wrong.
What is scary about these statistics are how common they are and how common the causes are. Cooking, heating, and electricity make up 67% of the residential fires. When we drive down the road, we are at risk at all times for a car accident. Anyone can sideswipe us, rear-end us, and end our lives, theirs, or the life of their vehicle for no fault of your own. The point is these events are not only common, but they can happen to anyone. For those they do happen to, the damage is often immense, even to the point of being irreversible. Physically, smoke inhalation, physical burns, or death can change our lives, end our lives, or take away the most important things in our lives. Financially, we may not recover either. Most people who own their homes will be more financially tied to them than anything else in their lives. If this goes up in flames, so can their financial future. The cost is immense to rebuild and relocate. Even if insurance companies do contribute, that does not mean you have the right coverage.
Many of us are landlords as well through ownerships of investment properties like apartments or many homes. Some of us upsized into a new home and decided to rent out our old home for consistent income. Landlords get reputations, and so do properties. As a landlord, you need to protect your reputation fiercely. A bad landlord will not receive renters, and therefore they will not receive income. Their supposed “asset,” which was income-producing, will soon become a liability to cover the carrying costs associated with owning a property. After all, taxes, mortgages, maintenance, and other fees will continue to come due in the form of a monthly bill, regardless of whether you have a renter.
If your property suffers significant damage, odds are residents and the community will remember the incident. The property and your tenant base will take a long time to recover if it ever does. Whether rightfully so or not, the local community will become fearful about the stability and fire safety of your property after it experiences damage. Even after a renovation, people will be hesitant to rent these locations, meaning you will either not have their business at all or have it at a reduced price. The cost of this damage is real and beyond the physical cost when the damage occurs. Some tenant businesses will never return, as the displacement process will be a hard one to forget. Additionally, liability problems can end your financial future or hinder it through items such as higher insurance costs.
The Longterm Effect of Fires
Fires often have a short-lived existence, but their reverberating effects can be far, wide, and long-lasting. Once the first domino falls with a fire, they can fall continuously for years with no end in sight. Our team will help you guard against this. We use our industry best standards to weed out the potential mishaps from a design, material, and construction standpoint. Performance indicators will be measured and logged for your property and reported to you in a detailed yet easy to understand formatted report. We will be honest with you. Your property will be evaluated against top standards and analyzed through a review of all materials, sprinkler systems, and other fire suppression elements. If there is an ability to improve now or in the future, you will know about it. Our job is to identify any potential problems and provide you with actionable work plans to efficiently execute on bringing your property up to standard as soon as possible. Our professional resources offer both one-time and periodic check-ins. However, to truly keep you safe, our team’s lifetime safety analyses should be implemented as a best practice to keep your family, your residents, and your financial future secure. We cannot eliminate all risk, that is impossible. What is not impossible is guarding against the risk as much as possible through appropriate construction and insurance set up efforts.
Our advisors are the best in the industry. How do we achieve such a standard? The answer is education. We study our clients, their needs, the physical conditions of their properties, and the solutions we can provide to them. We do not point them to coverage options and hope they understand a complex industry our customers are not intimately familiar with. Our team will assemble a package displaying what coverages are selected and why. You will understand what your options are, along with the variations of coverages and cost packages. Bolt-on / add-on options will be provided, along with an analysis of the cost and merit of including or excluding these options. You will know what you are buying and why.
The 2020 pandemic was a reminder as to the importance of coverage. While the actual insurance applicable to the pandemic may not affect residential locations, it has been a powerful reminder to have the right advisor who allows you to select the right coverages and truly understand what you are buying. Hundreds of people made the mistake of purchasing the wrong coverage, which excluded pandemic coverages or any business interruption insurance coverage. With businesses forced to shut down, many have gone out of business or will be doing so. In many instances, these issues were avoidable but were not avoided due to a lack of proper guidance about insurance coverage. Many of us in the industry have the same license, but not all licensees are created equal.
The presence of the right professional will dictate whether or not you will financially survive a catastrophic event. With the possible exception of taxes, living expenses are the most costly expenses for almost all Americans. Whether you rent or own your property, you have a monthly cost attributable to this occupancy. Yes, you have ongoing costs such as utilities. However, your occupancy’s real costs are rent or your mortgage and the physical interior elements of your home, such as furniture and your personal property. In the event of the all too common occurrence of a fire, you need to make sure you are prepared. Almost all modern residential loans and professional residential leases (for both homes and apartments) require insurance.
Most of us do not start living on our own in a home we own; instead, we rent. Therefore we need to be familiar with rental insurance policies. In addition, for many of us, later in life, we decide to rent out our residence or purchase another home for ongoing rental income. We need to understand renters insurance for all of these scenarios – the costs, benefits, needs, and practical requirements. In the case of renters insurance, the policies can vary significantly but are not complicated. Our team is prepared with a variety of packages of options. For property owners acting as residential landlords, we will provide you with appropriate coverage recommendations to require of your tenants.
Additionally, we can create enforcement measures in the event of a lack of coverage. This coverage is for the sake of both you and the tenant. In the event of a fire in your property, none of you win. You lose your physical property for income while they lose their home and personal belongings located within it. Renters insurance will allow your tenant to get back on their feet quickly while also avoiding one element of a possible lawsuit from that tenant. You do not want to be arguing over who caused the fire and who will fund the replacement of the tenant’s property loss in the fire. You are both better off knowing that all parties are adequately covered so that you can work together as a team to reach a rapid resolution.
We will provide you recommendations based upon your type of property, geography, and type of tenant base. A Class A building needs to be insured differently than a Class C building. Rents will be lower in a Class C location, and the type of tenant profile will be very different as well. In addition, a single-family residence will be insured differently than a triplex or a large apartment building. We will take into account other elements such as the physical construction type. Wood/stick construction is generally riskier for fire damage than a steel and concrete building. These items make up the entire picture of each situation that we will customize a quote for.
In the case of residential homeowners, insurance is a requirement of having a mortgage. That said, merely having coverage does not mean you have the right coverage legally or practically. Legally, you may be required by your lender or even homeowner’s association (aka the “HOA”) to have a specific type of coverage containing certain coverage amounts and types, to the benefit of both the property owner and the outside party (such as the lender or HOA). When considering your insurance options, it is essential to consider construction type, geography, and other elements. Florida, which is hurricane-prone, will be evaluated differently from northern areas, which may be susceptible to snow or hail damage. The property’s physical elements will be weighed with these geographical factors to provide you with a reasonable quote to suit your specific needs. An experienced agent is your best bet to get the best possible coverage for your situation.