CFD 584 – Making Sure Your Insurance Company Pays Up Q&A

January 2nd, 2020

J is answering all your questions about business, short term rentals, personal growth, and whatever else it is you’re curious about. We’re also exploring the subjects of insurance and occupancy in particular, how much insurance do you need and what metrics should be looking at to maximize your occupancy. Insurance is one area that you don’t want to cut corners so make sure you understand how to make it work for you.

Questions and Answers

  • How do we handle bad guests? 

The first step is to breathe and realize you will survive. Everyone will experience this at some point. The process of removing an unwanted guest that has broken your rules is the same no matter the infraction. One thing to note is if the person is willing to pay the fees for breaking the rules, take the money and move on.

If you have to file a resolution with Airbnb you’re going to need to do it immediately. Your window of opportunity is very small to file a claim so don’t wait to do it. If the guest wants to write a bad review, waiting to make a claim is not going to stop them from writing the bad review. You will have to rely on the content policy to protect you from an unfair negative review.

  • A question about improving a listing’s rankings

The caller has multiple listings but is wondering why a couple of them aren’t performing at all. Before a booking can happen, inquiries must happen, before that views must happen, and before that impressions have to happen. Each one is a statistic that can measured and looked at to identify where in the process the problem lies.

For this caller there seems to be an issue with the inquiries on her listing. The words in the listing itself may be the problem since people are clicking on the listing at a high rate, but something is turning them away at that point in the conversion process. A lack of reviews may also be a barrier for converting people that are landing on the listing.

  • A question about guests receiving packages at the unit

It’s always better to have guests route their packages to a local UPS store instead of the unit itself. You don’t need the liability of a guest receiving potentially illegal packages and the UPS store is insured against those kinds of things. That also comes a paper trail for an extra level of protection.

  • Does insurance cover lost business income?

The caller had a unit that got flooded which required a rehab and resulted in 12 months of lost income. In her case, the insurance only paid out for the days that were already booked that were canceled. She had the right insurance coverage at the time.

When it comes to down to getting insurance there is replacement cost and actual cash value and it’s very important to understand the distinction. When it comes to lost business income, J sets the limits at $120,000 and the contents limit at $40,000 because he knows the insurance company will always try to minimize the pay out.

The caller also made the mistake of registering her insurance under her own name instead of an entity like an LLC. That means she is paying more than J is on each unit, despite having considerably less coverage than he does.

Since the caller hasn’t deposited the insurance checks yet, she still has the opportunity to make further claims. A public adjuster is someone who can help her claim additional pay outs that she’s entitled to. The caller should look for a public adjuster with experience in hotels and put them on her case.

It’s important to keep in mind that the typical insurance adjuster works for the insurance company and not for you. 

  • I already have a business entity, can I use it or should I create a new one?

If your lawyer says it’s okay, go for it. 

  • What happens if a landlord tries to use the landlord presentation against us?

The presentation is not legally binding so there isn’t much a landlord could complain about in that regard.

  • Is there an upfront charge for a public adjuster’s services?

Most of them are contingent on the increase of the claim. If the adjuster doesn’t think they can increase the claim, they probably won’t take the case. If they want you to pay upfront, that’s a warning sign and you should look elsewhere.

  • What insurance company do you recommend?

Since J doesn’t want to be construed as trying to sell insurance, he can’t make a particular recommendation but you look in the student group on Facebook you will probably find some suggestions. 

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