Insurance Tips for Real Estate Investors: Avoid Costly Mistakes

Nick Ramirez (00:00)
This guy owns a home at the bottom of hill. I told Jeff and I was like, yo, I really think that you should get a flood policy here. Eight months later, we had, what were they called? Atmospheric rains? And he calls me, he’s like, dude, Nick,

Kristen Knapp (00:10)
Yeah.

Nick Ramirez (00:12)
I am having water that’s coming into my house from the outside. He sent me a video. He FaceTime me while it was happening. I was like, holy shit, there’s your flood insurance, man. There it is. His policy was 2,500 bucks and he got paid out a hundred grand. So I’m just saying like, remember, if you live anywhere on the side of a mountain or a hill or anything like that, and in most of the time, flood insurance for most homesKristen Knapp (00:26)
Wow.Nick Ramirez (00:36)
His policy was 2,500 bucks and he got paid out a hundred grand. So I’m just saying like, remember, if you live anywhere on the side of a mountain or a hill or anything like that, and in most of the time, flood insurance for most homes is going to beKristen Knapp (00:40)
Wow.Nick Ramirez (00:52)
five, $600 or less per year. Like come on, just do it. Just do it.Kristen Knapp (00:55)
⁓ wow.

Welcome back to the Real Estate Pros podcast. I’m Kristen Knapp and I’m here with Nick Ramirez, is an agency owner in Los Angeles of Goosehead Insurance. So we’re going to get into everything insurance and I’m excited. Thank you for being here today.

Nick Ramirez (02:38)
Let’s do it.

I promise to make this insurance conversation light, tight and bright.

Kristen Knapp (02:42)
Perfect! Just how everyone would like it to be perfect.

Nick Ramirez (02:46)
Exactly.

No sleeping here. We’re going to have fun with it. Thank you so much for having me on the podcast. It’s really exciting. I’m here to answer all your questions. What do you got? Hit me.

Kristen Knapp (02:56)
Well, let’s just start at the beginning. Like, how did you get into this industry and what’s your experience in it?

Nick Ramirez (03:00)
Well, I joke, right? My degree is Cinema Television Arts and I’ve been an insurance broker for almost 10 years. So can see how well that went. Not so great, but I’ve been in the business for 10 years. I fell into it. Someone recruited me. They tried to get me to go to State Farm and I was like, no, I don’t want to do that. And they’re like, well, what about a broker? And I was like, that sounds cooler. Let’s go that way. And I never looked back and I’m really happy that I did. So it’s been a crazy trip. have five sales agents on staff now.

Kristen Knapp (03:21)
Mm-hmm.

Nick Ramirez (03:28)
And I have an office manager. We’re based here in Culver City. But we write insurance home. So what do we write? What do we do? We write home, auto, flood, earthquake, umbrella. We’re really big on life insurance and helping investors with that. And pretty much all that stuff for the state of California and Nevada.

Kristen Knapp (03:47)
Awesome, so you’re kind of like a one-stop shop.

Nick Ramirez (03:50)
That’s it. You got it right.

Kristen Knapp (03:51)
And what’s kind of the benefit to going with someone of your size rather than like the Costco’s and the Geico’s of the world?

Nick Ramirez (03:58)
⁓ It’s it well, we’re not a call center, right? So like if you’re looking for a little bit more personalized experience you want to have a relationship with your broker, especially if you’re a real estate investor or someone like that and you’re constantly touching different deals and flips and stuff like that having a relationship with an insurance broker who understands the product who understands that there’s a sense of urgency and understanding how to write a policy correctly with the lowest competitive price is really important and So that’s kind of where we come into play

Kristen Knapp (04:27)
Yeah, nice. it’s good to have a relationship with people, more of a one-on-one relationship.

Nick Ramirez (04:32)
Yeah, I mean look, some people don’t give a damn about insurance, right? And that’s okay, that’s not a problem. If you don’t, bye Felicia, go that way, that’s cool. But then there are a lot of people that really take pride in that, that really focus on their business and they wanna know that A players know A players, right? And you wanna make sure that everyone on your team is there that knows what they’re doing, right? And so what I refer to as having your aces in their places.

Kristen Knapp (04:39)
Thank

Nick Ramirez (04:58)
And so that’s definitely a thing. I consider myself an ace. And if you look online on my reviews and how long I’ve been in business and all the people that we already work with, they’ll probably say the same. So that would be a reason why you would want to work with an actual broker.

Kristen Knapp (05:12)
Yeah, yeah, and if you look up Nick, he’s in Wall Street Journal, he’s in Fortune, he’s got all these articles. How did you land those?

Nick Ramirez (05:20)
Well, my background in media and PR, you know, so it actually came into play.

Kristen Knapp (05:23)
Yeah, there you go.

Nick Ramirez (06:14)
But yeah, and most recently, you know, had a conversation with ABC News ⁓ Australia and they reached out because they had a whole bunch of questions about wildfires because they in Australia, they have wildfires and they they I did a zoom call with them in January during the Palisades fire. So but yeah, lots of different press hits and ⁓ but yeah, happy to happy to be of service to.

depress people to have questions about things.

Kristen Knapp (06:38)
Well, let’s touch on that a little bit. mean, I know fires definitely in California. There’s a lot of vulnerable areas and it’s not just, you know, it’s not just in California. Fires happen everywhere. What are some, you know, mistakes people make? Like tell us about how do you even get insured in these fire prone areas?

Nick Ramirez (06:57)
It’s, so there’s a lot of different ways. It really just depends on what is your attitude towards insurance, what’s your budget, what’s going on there. So it’s, it’s, it’s multi-layered, but it depends on where you are. had another client who actually owns a 9,000 square foot home in the Palisades. Their house didn’t burn down. It was like one of like 10 that didn’t and they’re at the top of the hill. And so the rebuild value for that 9,000 square foot home is probably like $9 million, right? So.

So we had to create a solution for them that made sense both financially and coverage wise and we were just able to execute that like, I don’t know, this past week. So ultimately it just depends on how big the property is, who’s living there and all that other stuff. So there’s a lot of kind of variables that go into understanding how to get the right thing, but that’s kind of like our, that’s our secret sauce, right? Trying to help people navigate that.

Kristen Knapp (07:51)
Yeah.

Yeah, because I always hear about areas that can’t even get insurance because there’s so many fires.

Nick Ramirez (07:59)
That’s not true. I have

people come to me all the time, Kristen, and they’ll be like, especially real estate agents before they open escrow or something like, Nick, can we even get, is this even insurable? Right, you know, kind of thing? And the answer is, yeah, always. The answer is yes. What that price is gonna look like, right? And what kind of claims experience you might have if there’s a problem might be a little rough, right? But ultimately though, like,

If the home is like less than like for normal investors and we’re talking 5,000 square feet property, 5,000 or less, you should be able to have no issues getting insurance no matter how high fire risk that is. Look, the California does also have the California fair plan, which a lot of people know about. If you haven’t heard of it before, especially for the investors, sometimes the investors, they invest in properties that are like up in the mountains.

You know, and, and then they are shocked at why the insurance costs so high. It’s like, well, you’re flipping a property in an area that’s already considered very high fire risk. Right. And so these are things that you want to, know, and what we’d encourage any investors who are watching this or thinking about doing a flip or a flip and hold or a flip and sell, whatever it may be. To like hit us up and say, give us the address and be like, Hey, what do you think about this home? Do you think it’s going to be expensive? Not what do think that’s going to look like?

Kristen Knapp (09:06)
Yeah.

Nick Ramirez (09:25)
And we can always kind of guide folks out. look, if the home is 5,000 square feet or less, generally insurance is not a problem, right? It’s when you get over five is when the numbers really start to be moving. like, you know, someone who is buying a, you know, a 7,000 square foot home, of course, price is always going to be a thing, but price is less of a thing because if you’re able to buy a home that is that big, that’s like complaining about gas when you buy a Bentley, you know?

Kristen Knapp (09:32)
Yeah.

Nick Ramirez (09:52)
Like

Kristen Knapp (09:52)
Yeah.

Nick Ramirez (09:52)
it just comes with it. There’s going to be a premium and some folks, if you’re wealthy enough, they just self-insure. We don’t see a lot of that. But there are people that just decide to forgo it. If they don’t have a mortgage, then you just take the for risk on your own. But again, that’s really rare that we see that.

Kristen Knapp (10:43)
And that would apply to kind of all natural disasters like earthquakes, hurricanes, stuff like that.

Nick Ramirez (10:48)
Yep, so your standard homeowners policy covers fire, wind, hail, lightning, smoke, the weight of freezing ice, aircrafts, explosions, water damage, theft, liability. Can you tell I’ve said these things a few times?

Kristen Knapp (10:58)
Yeah

Nick Ramirez (11:01)
But what’s not covered under standard policies, right? So we live in California. What is it?

Kristen Knapp (11:07)
Wait, what? yeah. I didn’t know we were going with that. Yeah.

Nick Ramirez (11:07)
Earthquake, earthquake, yeah, earthquake, yeah, earthquake. then the other one, yeah, for sure. So earthquake is always separate with

what just happened in fucking Russia. Sorry, if you need to bleep that out, go for it. That’s what happens when you’re entertainment, right? But Russia, 8.8, right? So we had a slew of people, even today, they’re calling in and saying, hey, do I have earthquake? We’re like, yeah, no, remember we told you and you didn’t. And they’re like, well, can we have it now? It’s like, yeah, the market’s still open.

Kristen Knapp (11:18)
Yeah.

you

Nick Ramirez (11:36)
Right? but so earthquake is always separate and then flood. Funny thing about flood. Flood is water damage from the outside that comes in the home, not a pipe breaking on the inside. Pipe break on the inside is just considered water damage. Though people always say, Nick, I’m having a flood in my house. I’m like, that’s not possible. You’re having water damage. You know, they’re different. So flood is water from the outside.

Kristen Knapp (11:37)
Mm-hmm.

Mm.

I’m

Nick Ramirez (12:02)
If you live, and this is really important for investors, homeowners, everybody, if you live or own a home or a property that’s on the side of a mountain or a hill, like towards the bottom, right? Anywhere other than the very top. But if you’re here, here, here, here, here, here, and you’re at the bottom of an incline, get a flood policy, right? I had a client in Studio City. Studio City, have you heard of that place before? Studio City? A lot of people have, right?

Kristen Knapp (12:23)
Right.

Mm-hmm. Yes.

Nick Ramirez (12:32)
This guy owns a home at the bottom of hill. I told Jeff and I was like, yo, I really think that you should get a flood policy here. And I’m not, this is not me saying, trying to sell you shit that you don’t need, right? But I was like, look man, I think you should do it. And he did. And he got a flood policy. Eight months later, we had, what were they called? Atmospheric rains? Atmospheric rain stuff, right? Didn’t have that in college. Didn’t have that 10 years ago. But now we do. And he calls me, he’s like, dude, Nick,

Kristen Knapp (12:57)
Yeah. Yeah.

Nick Ramirez (13:01)
I am having water that’s coming into my house from the outside. He sent me a video. He FaceTimed me while it was happening. I was like, holy shit, there’s your flood insurance, man. There it is. Got paid out a hundred grand.

Kristen Knapp (13:12)
Wow.

Nick Ramirez (13:13)
His policy was 2,500 bucks and he got paid out a hundred grand. So I’m just saying like, remember, if you live anywhere on the side of a mountain or a hill or anything like that, and in most of the time, flood insurance for most homes is going to be

Kristen Knapp (13:17)
Wow.

Nick Ramirez (13:28)
five, $600 or less per year. Like come on, just do it. Just do it.

Kristen Knapp (13:31)
⁓ wow.

Do you think everybody should have it or people on the slope mostly? Yeah.

Nick Ramirez (13:37)
More slopes, more slopes.

Also though, people who live close to the coastline. Right, so like if you’re buying a home and you’re like Marina Del Rey for example or something like that, right, or Venice ⁓ or Santa Monica, again, close to the water, I don’t know, like if the cost is low enough, it’s peace of mind, Kristen, you know what mean? It’s just like, look, I hope you never use it.

Kristen Knapp (13:42)
yeah, right.

Mm-hmm.

Nick Ramirez (14:03)
Right? But that’s what insurance is for. It’s like if in the event that it does happen, that you don’t have to go through the financial hardship and the disaster of having to deal with it all on your own. Does that make sense? Yeah. Yep.

Kristen Knapp (14:12)
Right, totally. Are

there anything, like any add-ons that people forget about like that? Like that’s very interesting. I think that’s really good information for people.

Nick Ramirez (14:21)
The

biggest one for property is to home or dwelling, is if you live in it, it’s homeowners. If you invest, it’s a renter that lives there, a tenant. Then it’s called the dwelling policy. So those things are fire and liabilities. You’re all good. And then there’s flood and earthquake. Those are the biggest ones. then other things like if you’re like, now we can talk maybe for builders, people that are actually renovating, right? Maybe for a moment.

Kristen Knapp (14:46)
Uh-huh.

Great.

Nick Ramirez (14:48)
So renovations,

so there’s different tiers of renovations, right? There’s what my friends, some of my investors call like lipstick on a pig, where they’re gonna do $50,000 worth of renovations and they’ll be done in two months really easy. Okay, that’s the lowest kind of tier risk thing, that’s fine. If you’re going to be doing like a quarter million dollars worth of a budget where you’re gutting the interior, bringing down to the studs on the inside,

Yeah, that’s more risk, that’s builder’s risk and that’s going to have a higher premium. And then I have other investors that where they have budgets of multi-million or more, where they’re taking a single family home or a single story and then they’re adding another story on top of it, that type of stuff, those command higher premiums too because the risk is higher in the event of something catastrophically going wrong with a buyer. You could even have someone get hurt.

Kristen Knapp (16:13)
Yeah.

Great.

Nick Ramirez (16:23)
What if you were walking by the neighborhood and then like two by four fell off the thing and hit this person on the head as they’re walking? You know what mean? Like there are things that can happen. And I feel like sometimes like, you know what it is, it’s stranger than whatever it is. Random things happen in real life that are stranger than fiction, you know? And so.

Kristen Knapp (16:41)
Right.

Nick Ramirez (16:44)
You want to make sure that you’re getting the right liability coverage specifically for builder’s risk. If you’re going to be doing some heavy renovations, stuff like

Kristen Knapp (16:51)
And when you get this liability insurance, at what point can you change it or scale back?

Nick Ramirez (16:58)
when the reno is done.

Kristen Knapp (17:00)
Yeah, so there’s not like a time period.

Nick Ramirez (17:01)
So like once the project is completed,

that’s basically when you would either terminate the policy, right? That’s probably the best time to do it. But it’s really also important to know that when you’re renovating, right? And you have like contractors that are helping you with things, you need to make sure that the people that you’re bringing onto your job, right? The roofer, the plumber, the electrician or the GC who does the subs, right? You want to make sure all those people have their own insurance and are providing you the homeowner or the investor.

a copy of their insurance and enlisting you as an additional insured on their certificate. And the reason why is because if they’re culpable for something, and here’s the thing, lawyers, right, because lawyers, lawyers, when they sue people, and if anyone who’s watching this will testify and they’ll tell you, but when lawyers sue, who do they sue? They sue everybody. They’re gonna sue the…

Kristen Knapp (17:33)
Right.

Nick Ramirez (17:58)
Everyone gets named in a lawsuit. If you haven’t seen a lawsuit before, the defendants that are there, it’s a long list, right? And they’re going to be like, Kristen, this LLC, Nick, Eric, Jenny, you’re going to list everybody. And that’s just how it goes. And so it’s important to make sure that in the event that something happens where you feel like as the homeowner that you weren’t culpable for this, like it wasn’t your responsibility, that you can protect yourself against that problem.

by being added on their insurance in the event that they’re found responsible. Does that make sense? Cool. Protection, yeah, right protection. look, sometimes it costs money to do it, but like, trust me, anyone who’s gone through a lawsuit or anything like that, they’ll tell you, dude, it’s money well spent, you know, to not have to have these types of problems. Because when lawsuits occur, they take years and they’re extremely expensive.

Kristen Knapp (18:30)
Yeah, Yeah, just more protection.

Yeah.

Nick Ramirez (18:53)
And so it’s ideally not best to avoid that whole thing.

Kristen Knapp (18:54)
Yeah.

Yeah, and I think people probably get a little overwhelmed with insurance or kind of don’t want to deal with it. So they just pick any policy and they’re not really protected.

Nick Ramirez (19:08)
Yeah, like for example, like it would just happen the other day, this guy purchased a AAA home insurance policy, right? And then is gonna go in through like six months of renovations. I told him, was like, you’re doing this Mickey Mouse, right? This is a Mickey Mouse thing you’re doing. And he’s like, what do you mean? was like, anyone who knows what I mean by that, it’s a fugazi, like you’re doing it wrong. And if you have a fire,

Kristen Knapp (19:23)
you

Nick Ramirez (19:36)
because I don’t know a contractor flicked a cigarette, I don’t even know, right? Any type of problem, while that home was vacant on a reno, AAA thinks that it’s an owner occupied house, right? That’s the policy you got. So in the event of a claim, the adjuster is gonna come out, there’s gonna be an investigation and they’re gonna be like, what happened? it was under renovation, claim denied, right? And I told him that. I’m like, what, why?

Kristen Knapp (19:50)
Mm.

Wow.

Nick Ramirez (20:04)
You know, but we explained very clearly like home insurance, owner occupied insurance. And here’s another thing. People who are buying homes, right? This happens all the time. So for anyone who’s going to buy a house, and they’re in escrow and they’re thinking, okay, we’re going to buy this home and then we’re going to go right into renovation for like, you know, three to six months or longer. Right. Don’t buy a home owner’s policy for that scenario. Don’t do it. Right. Because that.

Kristen Knapp (20:29)
Yeah.

Nick Ramirez (20:32)
In this market in California, 90 % of policies that are written for home insurance, there’s gonna be an inspection. They’re gonna look at the effective date. So say we started the policy today that in 30 days, someone’s gonna visit that property on site and they’re gonna look around and they’re gonna see if this place is under renovation or not. If it’s under renovation, they’re gonna cancel it, They’re gonna cancel it, right? And it’s because

Kristen Knapp (20:52)
Right. Pretty easy to tell. Wow.

Nick Ramirez (20:58)
you’re securing the wrong policy with the wrong risk. It’s not the same. So it’s important to always disclose to your agent broker if you’re gonna get a home, let us know. And it’s okay, because then we’ll create a solution for you. like, look, dude, go over here. This policy is great. It’s a slightly higher deductible, but it lets you do the renovations you need to. When you’re done, you’ve moved in. Holler, let me know, and we’ll rewrite you to a

Kristen Knapp (21:02)
Mm-hmm.

Yes.

Nick Ramirez (21:24)
homeowner’s policy because now you’re living there full time. Does that make sense? So that’s the better way to do that. Yeah.

Kristen Knapp (21:28)
Right.

Yeah, I mean, I, you can totally see how the liability is just so different, whether you’re doing renovations, whether you’re doing Airbnbs too, like there’s a lot involved.

Nick Ramirez (21:40)
Yeah, and there’s like, in his thing, like when we have clients and investors, some investors that say, well, look, this is my house, but I also Airbnb it. So is there a policy that I can get that does those both those things? The answer is yes, there is. We have an insurance carrier that specifically writes policies specifically for that. So if you are going to do Airbnb and you also live there part time, right? Kind of thing or VRBO and you need a policy that covers that type of

blend of risk, have carriers that write that type of stuff. So it’s just, all you gotta do is disclose it. And I’ll tell you something, when you work with a broker, just like your dentist or lawyer, just be straight with us, you know? Because, you know, when you tell your dentist that you floss, they know you’re lying, right? They know you’re lying. like, dude, you know, like, well, for those people who are saying that, but you get my point. So for us with brokers, just be like, look, this is what I’m doing. This is how it’s gonna go.

Kristen Knapp (22:15)
Yeah.

Yeah.

Yeah.

Nick Ramirez (22:38)
Here’s the budget, here’s how long it’s going to take, or I live here but I also have Airbnb, what do you think? Blah, blah. Better to just be straight that way in the event of a problem. You don’t have to fight with the insurance company because guess what, Kristen? Who do you think has more money to fight in a lawsuit?

Kristen Knapp (22:55)
Right.

Yeah.

Nick Ramirez (23:01)
They do. Right?

And you won’t be able to hang. Trust. know? So better just to come clean. You know, just be straight.

Kristen Knapp (23:06)
Yeah.

Well, it sounds like, I mean, for every problem there are solutions for the most part. yeah, I can totally see the benefit of working with a company like yours and people like you, where you can really fine tune what you’re looking for.

Nick Ramirez (23:20)
Yeah, absolutely. It’s all about creating custom solutions for every single – that’s what’s so much – that’s actually what’s interesting about being an insurance broker is that every scenario presents slightly different risks, you know, and we got to be able to be like, alright, cool. And if there is exposure, we can say, look, this is covered, this one here, but theft of building materials is not and we’ll tell you, right? So that way, if you leave 50 grand worth of marble on the home and it gets stolen like

Kristen Knapp (23:30)
Mm-hmm.

Nick Ramirez (23:48)
It should never be a surprise. There should be no surprises.

Kristen Knapp (23:50)
Yeah, and

it sounds like you’ve probably seen a lot, so you know a lot of the scenarios to plan for. Yeah.

Nick Ramirez (23:56)
I’ve seen it all. I’ve seen it all. I’ve seen a lot

of different claims. I’ve seen good, bad and ugly but ultimately, look, as brokers, we’re here to add. We’re an advocate, right? In the event of a problem and when it does happen, I go to bat for our clients and every agent here, Annie, Josh, Justin, Patrick, all the people that work in my office as sales agents, if there is a problem and you’re not getting taken care of by the adjuster,

then we step up and we say, what’s going on? What’s the holdup? What’s the disconnect here? And we try to really move things along and be that independent advocate for you. And that’s a big reason why a lot of people like using brokers versus like, you know, the farmers or the state farms, because with those guys, they only have one product. They only have one thing to sell you.

Kristen Knapp (24:50)
Yeah.

Nick Ramirez (24:50)
So

they’re gonna just do their best to sell that one thing. For us, we have a lot of product and for us, we’re just trying to do what’s always best for the.

Kristen Knapp (24:53)
and

Amazing, well, where can people find you?

Nick Ramirez (24:59)
Yeah, nickramirezagent.com would be one. That would probably be the easiest one that I would direct them to. And nickramirezagent.com will, there’s a host of ways to contact me there. And there’s my contact information, everything. I think that’s probably the easiest place to find me. And then, oh, and then also on Instagram, sorry, since I found you guys on Instagram, also my handle is nickramirezagent. Feel free to follow, say hi, would love to hear if you watched this, if you learned anything.

Kristen Knapp (25:17)
Amazing. everyone.

Nick Ramirez (25:29)
⁓ You know ⁓ tag me and say hi

Kristen Knapp (25:32)
Well, I actually, learned a lot from this. So this was very educational for me.

Nick Ramirez (25:37)
Awesome. Well, I’m so glad

that you had me on and as fate would have it, I look forward to maybe doing another one of these in the future.

Kristen Knapp (25:43)
Amazing. Well, thank you so much for being here. All right. And everyone, thank you for listening, and we’ll see you back next time. Bye.

Nick Ramirez (25:46)
My pleasure, thank you for having me.

Next time.