How to Weather the Storm of Rising Insurance Costs with Calvin Roberts – EP 339

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Between record inflation and extreme weather, insurance isn’t just a sellers’ market–it’s a captive industry. So, what can you do to alleviate some of the financial pain, secure your assets and potentially even profit from insurance?

To answer those questions, I’m thrilled to be chatting with Calvin Roberts. He’s an executive at Falcon Insurance Agency of Michigan with a unique focus in real estate risk management.

The reality is, we’re currently in one of the toughest insurance markets in history. In fact, the insurance costs were almost double what I budgeted for one of the buildings I purchased in 2022, with no sign of things cooling down in the near future. 

If you want to know how to properly budget your insurance spend, de-risk your investments, and even turn a profit selling insurance to your residents, you’re going to love this episode. Enjoy!

Key Takeaways with Calvin Roberts

  • How COVID, inflation, and catastrophic loss events have all driven up insurance costs (and how to rework your deal budgets to address this).
  • Insurance programs you can take advantage of to reduce risk and save money as you grow your investment portfolio.
  • Why you might want to create a captive agency to insure your own losses while selling insurance to your tenants–and how this can become a revenue stream if done correctly.
  • What to look out for if you need to insure a short-term rental.
  • How to use contractual risk transfer agreements to decrease your liability.

Calvin Roberts Tweetables

“We are entering what I see as the hardest insurance marketplace in history.”


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Josh Cantwell: So, hey, welcome to 2023. This is my first official recording of the New Year. Welcome back to Accelerated Investor. I’m your host, Josh Cantwell. And today, we’re going to talk about multifamily insurance. We’re going to talk specifically to Calvin Roberts. He is one of the executives at Falcon Insurance Agency. And we’re specifically going to talk about why right now is one of the hardest times in history, specifically because “insurance” companies, it’s a seller’s market. Insurance companies are strong arming their pricing, and that’s because, number one, of record inflation, which has to do with all the money printing that happened over COVID. But number two, the frequency of catastrophic events that are happening, like hurricanes, tornadoes, freeze events, and things like that.


So, we’re going to talk about, number one, what you should be budgeting for your insurance when you buy a multifamily building. How much per unit per year should you be budgeting? That’s number one. Number two, we’re going to talk about what’s called a tenant liability master policy. Number three, we’re going to talk about how to become an actual owner in a brokerage agency, an owner in an insurance company that can actually profit from selling insurance to your residents. So, it’s a very high level of what’s called a captive agency for this tenant liability master policy.


And then we’re also going to talk about transfer of risk, number four, where we can actually transfer the risk for vehicles, transfer the risk for general contractors out of our hands and over to our residents and over to our general contractors to make sure that we’re as insulated as possible with our buildings, with our grounds, with our parking lots, and everything that goes into that. So, this is a fantastic conversation with Calvin Roberts from Falcon Insurance. Here we go.




Josh Cantwell: So, hey, Calvin, listen, welcome to the first recording of 2023 on Accelerated Investor. Thanks for joining us.


Calvin Roberts: Oh, thank you again very much for having me, Josh. I’m very much looking forward to chatting with you.


Josh Cantwell: Yeah, you too. You too. So, Calvin, as we start 2023, tell our audience a little bit about where you’re at if you’re investing, tell us about your recent successes, and what do you think 2023 has in store for you?


Calvin Roberts: Perfect. So, my name is Calvin Roberts. I’m the Principal of Falcon Insurance Agency of Michigan. We’re a national boutique commercial insurance brokerage specializing in serving real estate investors. We take on, as I joke, anything with four walls. So, we love multifamily, commercial real estate, rental, one for family, Airbnb, hotels, really anything where there is a solid structure. We’re very experienced and knowledgeable and bring a lot to the table for real estate investors.


And for myself, personally, I am finally getting into the real estate game. Later this year, I’m planning on embarking my journey with Ann Arbor off campus house hack with a maybe four or five-bedroom off campus and work on scaling up from there.


Josh Cantwell: Did you say Ann Arbor?


Calvin Roberts: Yes, sir.


Josh Cantwell: We have to stop this recording definitely. We’re investing in the University of Michigan for me, my friends, my students, my investors, or anybody on the show. Oh, yeah, Ohio State, Michigan, unfortunately, both just lost in the college semifinals, both in amazing fashion. Both games were really, really well played. And Michigan, obviously, is a beautiful, amazing campus, great place to invest.


So, Calvin, talk to us about insurance and how it’s changed, obviously, with the costs of so many things going up, the costs of, just everything with inflation, the cost of lumber went up, hundreds of percent, the costs of so many things went up. Now, things start to be leveling off a little bit. Inflation’s starting to temper a little bit. However, it’s made everything more expensive to buy, which means it makes everything more expensive to insure, so much so.


And I’ll just tell you a quick story, Calvin. I bought a building back in April of 2022 for $16.3 million. The replacement cost was $42 million. So, our insurance is actually almost double, not quite, but almost double what we underwrote for. And we’re going to have to continue to fix up the building and try to get that cost down over time. But it’s probably never going to go back down to what we thought it would be originally simply because insurance costs have gone up. So, talk to our audience about what’s evolved and changed, especially over the last couple of years with COVID, inflation. What should our investors be looking out for? And what kind of advice can you give them?


Calvin Roberts: So, right now, we are entering and midway are into what I see described as the hardest insurance marketplace in history. And what a hard market means is it’s, for a simple explanation, a seller’s market. Insurance companies are able to dictate terms, strong arm pricing. It’s been a less friendly environment for the real estate investor over the last three or four years, and this is being driven by several factors. The first, as you mentioned, inflation, it’s been challenging for insurance companies because if, let’s say, you– I’ll throw in an example scenario here.


Let’s say you’re expecting to pay on an account or a portfolio of accounts where the average building size is $1 million, that’s what you’ve underwritten the premium for. You’re expecting the payout $500,000 in claims across the one-year period. And because of inflation drastically increasing the actual rebuild and replacement costs of these properties, when the claim happens, let’s say you actually are forced to cut a check for $700,000, well, in doing so, you have to make that money back somewhere. And that comes in the form of increased insurance premiums for all of us.


In addition to inflation, you have factors such as of increasing frequency and scale and scope of catastrophic loss events. The hurricanes that we saw earlier this year in Florida, the wildfires that have been happening more frequently out west, and like we’ve just had over the last several weeks, the freeze events that have continued to occur in recent years, they’re causing a greater than anticipated catastrophic loss experience for the property insurance industry. And what that means is each insurance company generally has what’s called reinsurance. So, let’s say you’re State Farm and you don’t want to have crazy large reserves, you want to use your capital in the most efficient and effective means possible rather than having $10 billion tucked away in a savings account, so to speak, you might have $5 billion in reserves, and then you purchase reinsurance. So that if, let’s say during one season, we have more than $5 billion in hurricane losses, we as the insurance company know that we have our own insurance that would respond and sell all those losses, allowing for the most efficient use of capital throughout the insurance industry.


Josh Cantwell: So, you’re paying up to essentially a stop loss, right? The insurance company knows that they’re going to cover X amount. They’re essentially the first line of defense, the first line of insurance, and then they’re going to be reinsured by some other insurance company who’s willing to take on additional risks.


And so, if you look at inflation and just the cost of things going up, you look at the frequency of these catastrophic events, you look at replacement cost of older buildings, older buildings that maybe are not trading for $42 million like that building I bought, but in order to rebuild the entire structure would cost $42 million makes insurance costs more. Is there a number, I’m curious, Calvin, if you were underwriting an apartment deal, a lot of people like rules of thumb or shortcuts, is there a per year per unit number that people use?


I was using about $300 in the past per unit or 25 bucks a month, $300 a year per unit as my kind of rule of thumb for underwriting, then I would adjust it based on quotes we would get and things. Recently, I had moved it up to $350. Is that in line? Do you see that going forward to changing?  Do you see that going up even further? Or is that going to stay for a while?


Calvin Roberts: I would expect it to continue increasing in coming years. And it’s primarily being driven by inflation but also the fact that reinsurance. I was just reading an article last weekend that the expected cost of property reinsurance going in 2023 when the most reinsurance treaties have renewals either on 1/1 or on 7/1, so twice a year, those staggered. I’m expecting to see a 50% increase in the cost of reinsurance at our upcoming treaty renewal this summer.


Josh Cantwell: Okay.


Calvin Roberts: So, it’s unfortunately here to stay for at least the short and most likely medium term where it’s also very driven by which market you are operating and investing in. So, in some place like the Upper Midwest, it’s going to be a lot more stable than if you’re in places like the US Southeast, especially if you’re in a coastal-protected region. And this is due to those catastrophic loss events.


And I’m sure in Michigan, we might get hailstorms, we might get tornadoes, and of course, the occasional fire, but we’re not going to be hit by a hurricane. So, we have that working for us. And I would generally agree with your $350 per door assessment on an annual basis in right around half of the United States.


Josh Cantwell: And then for Western markets, the middle of the country that are not as subject to these catastrophic events. How about those markets where there are catastrophic events? What should people be underwriting for as a double? Is it 50% more?


Calvin Roberts: It depends which market specifically. So, if we’re talking the US Southeast outside of the coast, so you’re at least 75 miles N1, I would expect to see maybe between $500 and $650 per door, so maybe Charlotte, North Carolina or inland Georgia.


Josh Cantwell: That kind of market.


Calvin Roberts: Exactly. And unfortunately, places like Florida, I mean, you can quadruple that $350 per door. I would expect to see between $1,000 and $1,500 per door in the vast majority of Florida. And certain regions in Florida are more closely affected by increase in price than other regions. Miami-Dade County has been taking very sizable increases in the cost of property insurance in recent years. But if you’re talking Orlando, you’re a lot less susceptible to that hurricane risk and overall have a better loss experience. It’s going to be less abrasive, one could say.


Josh Cantwell: Yeah. So, outside of the property insurance that you buy, if you were insuring someone like me, so I’m asking this for selfish reasons, right? So, we own about 3,000 units. We’ve had as many as 4,400. We sold off about 1,300, 1,400 units in 2021, which was great, but we have about 3,000 units. We also own a construction company that does a lot of our unit turns and common spaces and exterior renovations, exterior paint boilers, that kind of stuff. We do that in-house actually, or we sub it out if it’s a specialty thing like a boiler. So, we have that kind of risk as well in the construction company. A lot of our members and listeners have a very similar setup that they’re a general partner, they’re syndicating deals, they’re raising capital from investors. They also handle some or all of their own construction.


We outsource our property management to third parties. We have four different property management companies we work with that are managing our portfolio now all over the country. What other kind of insurance and what are the kind of risks are there that a guy like me should be looking at, or our audience, if they’re in a similar situation or looking to grow into a similar situation, what kind of insurance should they be looking at buying other than just insuring the property itself?


Calvin Roberts: So, there are a few things I recommend for the growing small and true middle market real estate investor. So, we need a certain amount of critical mass for something like this arrangement to make sense, but if we’re greater than 1 to 200 doors, I strongly encourage a what’s called tenant liability master policy or program. And this comes into play during events like we just had in the Upper Midwest with our most recent freeze occurrence over the holidays. So, let’s say you’re a tenant, goes out of town for Christmas or the holidays, and they think, oh, I want to save money on my heat for electric bill. So, I’m going to turn the heat off in my apartment. I won’t be there, I don’t need it. And then they come back and there are burst pipes and water all over the floor and your carpet, drywall, and you’re looking at maybe $75,000 to completely renovate that. You’ll not bring it back up to where it was before the loss. Eventually, that had been a loss on the building owners, property insurance policy, and that negatively affects your claim’s history, the facts your ability to renew with that company, you might be forced into essentially a higher risk pool company that maybe accepts people with losses, but they make them pay for it, if anything. So, it’s not good for the building owner, even though we have that insurance option that we can always turn to. But because this directly occurred because of tenant negligence, we are able to collect on the tenant liability master policy.


Josh Cantwell: Okay.


Calvin Roberts: Over the last two weeks I’ve had something like 11 burst pipe losses. It’s been a great time. I’m ready for spring.


Josh Cantwell: I was talking to one of our property managers yesterday, Calvin. His name is Zach, and Zach manages a portfolio of about 16 buildings, and seven or eight of those are ours. So, he manages about, let’s call it $75 million of asset value and it’s about 450 doors. He said he had 16– or I know he had 16 buildings. He had 11. I think it was 11 or 12 burst pipes and hundreds of heat coals because you know how it was, I mean, it was 55 degrees one day, and three days later, it was -25 degrees with the wind chill.


And then you have pipes that are normally in a building that are pretty secure, that are inside the brick, but they’re within six inches of the brick. And the brick is so cold that the pipes actually froze. It could be in the rafters, it could be in the dropped ceilings, it could be the domestic line. We had about at least four or five different pipes freeze in different buildings. This all happened on Christmas Eve and Christmas Day. So, Zach was real happy about that, working an 8, 10-hour day on Christmas Day.


So, the tenant liability master policy, would not their renter’s insurance cover some of that? Or how does the renter’s insurance policy? Because we require that they take renter’s insurance and they can pay through it right through our portal, or they have to show proof that they bought it. And about 85% of them either bought it or show us proof. There are some that fall through the cracks that we don’t have proof or whatever. I don’t want to say it’s 100% because I know it’s not. It’s probably 85%.


So, if the building policy wouldn’t the renter’s insurance policy cover some of that damage that was caused? And then, let’s say they didn’t buy the renter’s policy, then there’s the tenant liability policy popped in to cover against these losses that would ultimately fall to the building?


Calvin Roberts: That is correct. So, this is a backstop that protects the property owner and operator as well as the tenant. That way, property insurance company isn’t trying to subrogate to them to recover their money. They would otherwise pay out in the form of a claim to the property owner. So, it’s a backstop mechanism that maintains and verifies 100% compliance and your renter’s insurance/tenant liability portfolio.


Josh Cantwell: And does this something tenant liability that the owner pays for?


Calvin Roberts: Directly and indirectly. So, the initial cost is to the property owner. The mechanism that we suggest is you have a lease agreement that stipulates you have the right to place this insurance if the tenant fails to do so at their expense, and then you pass it on in the form of a line item cost and their monthly rent invoice.


Josh Cantwell: So, it’s a bill back to the tenant to pay for that. Okay.


Calvin Roberts: Exactly.


Josh Cantwell: And now, I had a guy approach me about creating my own insurance, essentially captive agent, that would then almost self-insure, if you will, captive agency to do this. I’m pretty sure this is exactly what he was kind of presenting to me. He said, look, you’ve got this critical mass. You’ve got these, let’s say, thousand $1,200 doors just in the Cleveland area. You got 900 doors in Houston, you got another thousand in Atlanta. He specifically said, okay, for the Cleveland portfolio, this tenant liability master policy, that there was a mechanism that could become, essentially, a captive insurance agency and we’re essentially paying a certain amount to ourselves and essentially insuring some of that possible loss.


And then assuming that you don’t have catastrophic claims in a year, then there would be some sort of profit available to go back to that business. It’s essentially a captive agency. So, I kind of understand, I’m kind of going through the process of learning about it to see if I want to do this, but for those people that are part of our audience that have a significant amount of doors, why don’t you explain that concept? Because the building insurance is one thing you need Calvin for. The renter’s insurance, we’ve talked about that, that’s pretty simple. The tenant liability policy to basically pay it as the owner, bill it back to the residents, that’s another way to protect. But now, this could become a possible income stream, like an opportunity to profit from this while you’re the apartment owner, the operator. So, Calvin, explain sort of high level, again, the mechanics of how that would work.


Calvin Roberts: Absolutely. So, with the tenant liability master policy, there is a mechanism that an operator who maybe small or medium-sized, they have less than a thousand doors enrolled into this program. They can profit off of that item as well. So, let’s say your cost might be $9 per door per month and you charge $14 per door per month. There’s a $5 administrative fee baked into the cost that you’re passing on for the TLO program. So, you are able to generate some ancillary income from that. In that scale, it can turn into a very healthy revenue stream, profit-generating opportunity. But if we are truly medium-sized or bigger, we have at least a thousand doors enrolled into this program. You can form what is called a captive insurance company that is a licensed insurance company that is able to pay the claims, set reserves, underwrite to their preferences, and so forth. And it’s a very fantastic mechanism for that true middle market multifamily group because you are able to profit off of not just the underwriting income, so the premium minus claims, minus expenses that is generated from this activity, but also much in the same way that Berkshire Hathaway made their money. You can dig in to the investment income and the float that your reserves are generating during that time.


So, you might have a half million dollars in reserve for something like this on a medium-sized account that we set up with a captive, and let’s say that generates between 6% and 8% in safe investment grade vehicles to place our capital. We are meeting the reserve requirements set by each state where we will be operating and we’re able to get a piece of the investment income that is generated from this activity. So, it’s like one, two, three…


Josh Cantwell: They’re sitting there doing nothing, what you’re talking about, then having that reserve dollar actually earn a rate of return, preferably in some liquid, fairly fixed investment vehicle. In case there is claims, we can access the money, and it’s not volatile like the stock market or crypto where it’s going up and down wildly, but you’re earning that maybe 4% to 6% to 8% kind of return. Those dollars then stay back with the owner of the captive agency, which is often the general partner or the operator of the building. So, it’s an additional income stream while you’re also insuring for this tenant liability that the tenant that lets their unit freeze.


To that example, Calvin, I actually had a woman. She’s a little older. She’s a little bit of a hoarder. She left her windows open during that. She was still living in the unit and she left the windows open, I’m not sure why. And sure enough, the pipes in the bathroom and the pipes in the kitchen, which were obviously right next to the windows, froze, in her unit while she was living in it. So, you just never know what people are going to do. People are wild and crazy.


Now, let me pivot a little bit to Airbnb insurance, right? Help our audience understand if they have a single, a double, an apartment building, or a complex of Airbnbs, is that complex? I don’t do a lot of Airbnbs. I’ve owned a few from time to time. I do own an apartment building downtown Cleveland that we’re converting a few units into Airbnbs, but what’s there to look out for, if anything, regarding ensuring that Airbnbs, where you have traffic coming and going, you have people doing staying for one night or a week versus tenants that are staying for 12 months at a time?


Calvin Roberts: So, the one for family short-term rental segment is fairly simple to place insurance for. There’s a number of different companies offering coverage, entertaining that segment of real estate. And we write, and actually, I won’t say probably around $600 short-term rentals. You need a specialized product that is explicitly friendly with the short-term nature of your tenancy. However, it’s not incredibly difficult to place insurance for a smaller building that is used for the purpose of short-term rentals.


Now, with the true multifamily, pipe wall stores, that is where things can become much trickier and much more gray very quickly. And with the apartment segment specifically, if the vast majority of our units, more than 50%, are short-term rentals, there are some classifications that you can use. You can chat with your insurance company underwriter and ask if maybe a hotel or motel classification would suffice. And most often, they will agree with that because the exposure presented by a hotel or motel is not dissimilar to what you might find with a short-term rental.


However, if you have an apartment building with, let’s say, 20 units, and five of those are short-term rentals, it puts us into essentially a no man’s land where insurance companies, they do not like having an apartment policy where there is short-term rental contained there with them. And if it’s not greater than 50% of the units, you can’t really call it a hotel either. So, how do you approach that? Well, you make a justification to your underwriter that this is an incidental exposure to the short-term rental and that’s not the primary focus or usage of the building. And it’s more or less placed on a case-by-case basis. And one mechanism that you can use to further muddy the waters in your favor as the operator is to lease those units to a different entity that you control, and then you sublease those units out on the short-term rental platforms like Airbnb.


Josh Cantwell: Got it. Got it. Okay. So, if I was to– which I’m going to do these one or two units inside of this 41-unit building, is that even something that I really need to bring up with only being one or two units, like less than 5% of the building? Or is it something I should bring up and justify to the underwriter and say, listen, this is a full market rate downtown, regular apartment building; however, we’ve got these one or two units that were leasing on Airbnb? Are they even going to care? Do they want to know? Is it something we should disclose and justify to them? And then they’re going to maybe modify the policy slightly or add a rider to it. How would that work?


Calvin Roberts: It’s a good idea to bring to your broker’s attention. Some companies, they do not have any policy language that is hostile to the short-term rental activity. So, you’re not going to find an exclusion or anything like that with many companies, but it is against the guidelines, with the vast majority of companies. So, they will come and yell at the broker, like, “Hey, why did you write this apartment building that has some Airbnb activity going on inside?”


So, I think it’s going to be transparent and forthcoming, more so to prevent any exclusions that could be prevalent. Some companies do exclude, for example, liability arising from short-term rental activities. So, it’s good to get ahead of that. That way, you know how the cards are laid out and you can make adjustments accordingly versus having this come up after the loss occurs, and then we find out, well, no, we don’t have coverage for liability and this Airbnb town that is suing us because they slipped and fell walking into their unit. So, it’s good to be very proactive in that sense.


Josh Cantwell: Got it. I love it. Sounds great. Listen, Calvin, I really enjoyed this conversation, especially because of our portfolio and some of the recent craziness with these catastrophic losses. Are there any other words of advice or things as we wrap up here today that you would really like our audience to know either about you, about your firm, or about how they should be looking at insurance for their buildings?


Calvin Roberts: One of the biggest things that I’ve pushed for my clients to adopt is a best practice. In recent years, it would be really two things. One, we should have certain contractual risk transfer agreements in both our tenant and our contractor agreement contracts. So, on the tenant side, for an example, we should require that if the tenant has a vehicle that they’ll be parking on premises, maybe we have a parking lot adjacent to this building, we should have an explicit contractual disclaimer of liability drafted with counsel opinion and assistance that states if the tenant’s personal auto is stolen or a tree branch falls on it during a windstorm or another car backs into it and leaves the scene that we, the operator, are explicitly not liable for that.


And I drive that opinion from performing case studies on a multitude of middle-market multifamily groups. For example, locally, we have McKinley Properties of Ann Arbor, Washtenaw County. They’re a very healthy, mid-market multifamily group in Michigan and Florida with around 6,000 doors, been active for around six decades. And reading through their tenant lease agreement, they have a portion that explicitly disclaims liability from whatever may happen to a tenant’s personal auto that’s on the premises.


Josh Cantwell: Great advice. Things happen, tree branches fall, people back into people. And as crazy as it sounds, cars get stolen even from the best areas. I mean, A-class, B-class, it’s not like it just happens in the hood, I mean, cars get stolen. And as a matter of fact, I heard, I don’t know if it’s true, but the Alfa Romeo dealership that’s up the street from me had 20 vehicles stolen at four in the morning the other day. I have yet to verify whether that’s true. But to think that 20 Alfa Romeo’s could get stolen at one time, it’s obviously a very coordinated network of thieves and bad guys. And if that can happen in an Alfa Romeo dealership, you bet your buddies, it can happen at your apartment complex.


Calvin Roberts: Oh, yeah. I mean, organized crime groups, they do not hold back in terms of where they will take action and commit bad things. So, just because you’re investing in a very nice community with class A or class B building does not mean that we are safe from something like that happening. And let’s say maybe the tenant neglected their duty to buy comprehensive and collision coverage insurance for their personal auto, if you’re looking at either not being able to get to work or having a lender, a bank barking at you because you stole them 25 grand on the loan, now you don’t have a car, that tenant is going to be directly incentivized to come pointing fingers every which direction.


Josh Cantwell: Why don’t you have more security cameras? Why didn’t you have a gate out front? Why didn’t you have blah, blah, blah, blah, blah? It’s not my fault. I’m going to sue the operator for the loss of my vehicle because I didn’t have the right insurance or didn’t pay my insurance that was covered or whatever.


Calvin Roberts: They forgot to pay their bill at renewal. And if that were to occur, the first thing that their attorney is going to ask for is a copy of the tenant lease agreement to see who is contractually liable if it’s mentioned. And when the attorney reviews that lease agreement and sees that there is an explicit disclaimer, it will hopefully just motivate 90% of potential affected parties from taking action against us.


Josh Cantwell: Yeah. Now, you mentioned there was a second one. You mentioned the tenant transfer of risk. What was the second one you mentioned?


Calvin Roberts: So, this would be a contractor that we have come work on our property, a best practice for something like that. I’ll use a real-world example of something that we just have happen. We could go now. Whenever you have a contractor come out to your property, maybe they’re cutting down a tree or they’re working on plumbing or installing an alarm notification system for your fire suppression system, you need to make sure that you have a general liability certificate naming yourself as an additional insured.


And they also think it’s a good idea to request the worker’s compensation insurance certificate and the GL will come into play because what if that alarm monitoring system fails your fire suppression system, which regularly does not have water and we know that from the inspector coming out over the summer that there was no water in the sprinkler system. So, it was a super old school system, where it fills on demand versus having sitting water in it that most modern sprinklers might have.


Let’s say that your building is in a more challenging market, like maybe Detroit or Toledo and you have an issue is vacancy in the building where insurance companies don’t want to offer all-peril, as they call it, or special form because of loss where everything that is not specifically excluded finds coverage. We only have basic form where they cover 14 named perils and nothing more. So, what happens if you have that or a monitoring system come out and they fail to do their duty to drain those fire suppression lines after they perform a test on the system? They leave water sitting, and then we have a freeze event like we just had a week ago, and we end up with burst pipes throughout the building. Well, our insurance– exactly. It was a real-world example of something we just went through and are working through presently.


But the story on this is water monitoring company was hired. They came out, installed a monitoring system for the fire suppression system. They filled blinds with water to make sure that they were structurally sound, and then they forgot to drain them. Maybe mostly a residential-type alarm installation in this large commercial building was just outside of their experience and expertise and they made a booboo. And because the building is majority vacant, we only have basic cause of loss on the building. I threw spaghetti at the wall and up over a hundred insurance companies, and that’s all that we could return. Insurance companies aren’t big on paying claims that they reasonably expect to happen. Something like this on a vacant building is reasonable to anticipate from their front. And you know how insurance companies are.


Josh Cantwell: Right.


Calvin Roberts: So, we’re in a scenario now where a contractor, based on the way that we interpret the events, has resulted in direct financial damage to my client and they cannot recover from their insurance company because it’s not a covered peril. So, we have to file a claim on the contractor’s policy because we know that there was no water in the lines prior to them taking action about a month ago when they installed this system. And as a result, they failed to do their duty. It caused financial harm to my client. They, in my opinion, are reliable. So, we filed a claim against them. And that’s why having that certificate is important for you.


Josh Cantwell: Yeah, having that served, being a second named on that is huge. That’s great stuff, Calvin. I actually was in the financial services world, and my dad was in property and casualty for a long time and pivoted over to doing employee benefits, health insurance shop, and benefits shop for long time. So, I value these kind of conversations a lot. Insurance is always evolving, especially with inflation, especially with these catastrophic events happening. This opportunity to do a captive type of program, those are all changing and evolving.


So, Calvin, if our audience wants to reach out to you, get insurance for their building, talk about some of the things we talked about today on the show, where can they reach out to you? What’s your website, phone number? How can they get a hold of you?


Calvin Roberts: I am Calvin, C-A-L-V-I-N, Calvin Klein, And our direct line is 734-887-9110. I’m also extremely responsive on Facebook, LinkedIn, email, your preferred method of communication. I’m always available.


Josh Cantwell: Awesome stuff, Calvin. Listen, thanks so much for carving out some time today. Have a great and happy and successful 2023 and thanks for being on the show. We really appreciate your insights.


Calvin Roberts: Likewise. Thank you again for the opportunity. I appreciate that.




Josh Cantwell: Well, there you have it, guys. Listen, it was a great interview to start out 2023 to talk specifically about some of those insurance concepts with Calvin. If you enjoyed the show, go ahead and push down right now the Subscribe button. Make sure that you leave us a five-star rating and review. I always appreciate those. We’ve gotten hundreds and hundreds of reviews for this show, hundreds and hundreds of our new subscribers and members.


And also, guys, listen, don’t forget that in 2023, we’re going to be hosting what we call the Forever Passive Income Live event. The Forever Passive Income Live event is going to be held pretty much on a monthly basis or a bimonthly basis, which is where I’ll teach for three days my best strategies for investing in multifamily, specifically in this new upcoming market where we’ll be fighting against a recession. There are going to be more foreclosures, there’s going to be more receivership deals and lower prices and better opportunity for all of you. So, if you are finally ready to jump in and really learn all of my best techniques and strategies and do it for three straight days and kind of learn fire hose, man, drink out of the fire hose and get all that information. Go to and go ahead and grab a ticket.


Tickets are only a few hundred bucks. We run specials from time to time, which actually give you a better price than that. And there, you’ll learn exactly how to buy multifamily, how to acquire them, how to raise the capital, how to structure your insurance like we talked about today, how to execute the CapEx, increase the value of your buildings, just like 220 Chevy, a building that I bought for $11.65 million that today would appraise for over $18 million with over $5 million of equity. I’ll teach you exactly how to do that at We’ll see you next time on the show. Take care.

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