Self-Insurance Story! Please read.
1) A bank foreclosed on a multifamily apartment building and no one wanted to bid at the foreclosure auction. So the property was then owned by the bank/mortgage holder.
2) For the next two years the bank was not liable to manage the property or keep it up to code. Things went unfixed. Tenants moved out and gangs moved in. No one cared!
3) As a landlord/contractor, the Bank/Owner and the City Housing Department wanted to get "someone" to turn the property around.
4) I was offered the property for a "cheep cash price" and was promised I had 4 to 6 months to turn things around.
5) I purchased the property with a 50% down payment and securing a basic "Fire/Liability" policy.
6) The day after my purchased I was delivered by hand at the property two years worth of "Violations" by the various City Departments.
A) My mortgage was called in
B) My insurance was cancelled
C) The property was "Red Tagged" and the remaining tenants had to move out.
The City wanted me to pay all units around $,5000 in relocation costs.
At this point my LIABILITY was huge. Because I had no insurance and the load was with a Federally Insured Bank, I was looking at many "Takers" that wanted my property.
BUT since I was a contractor that "had many other types of Insurance" AND "I WAS ALSO SELF INSURED WITH THE STATE" (Having 1/4 million dollars in a trust account naming the State as beneficiary in case of specific judgments. With out the City, State, Bank and others securing a Judgement in Court, after a trial, I was shielded from further punitive actions by "government".
Within weeks the State then changed it policy about Self Insurance. Now I could no longer just set up a special trust account, I had to give the money ($250,000) to the state to be self insured.
I then got caught a few months later operation under self insurance again. They wanted to throw the book at me. But now I put the $250,000 in State Bonds and had my broker set it up naming the State in trust. Again the State Insurance People then had to rule against me again....
So during this came of cat and mouse I was able to fix up my property and get it insured, meeting all codes and rules, laws and "made up stuff" that came my way.
It is not that easy to be self insured when you:
Have tenants that are "People". Have a Loan. Have a property under the radar of Various Housing Departments... --47.156.xx.xx