Property owners know that property insurance is a good idea and is usually mandatory if a mortgage is involved. However, the biggest challenge is often purchasing the right insurance policy, as there are a wide variety of coverages you can choose. Even the best policies on the market will not compensate you for all damages.

An excellent REO property preservation company, like First Freedom Preservation, can assist you in assessing your REO portfolio and can identify the right kinds of insurance policies that will protect your investments from environmental damages, mold, infestations and wear and tear.

Environmental Damages

Environmental disasters such as earthquakes, landslides and floods are not usually covered under home insurance in most states, so you’re likely to purchase additional riders that are appropriate for your area.


Insurers rarely pay to fix mold caused by neglect, poor home maintenance or improper construction. However, if there were a sudden leak in your plumbing, and you took the necessary immediate actions to repair it, your standard policy may cover the documented repairs.


Insurers typically will not cover bug infestations such as termites or mice simply because they are considered part of maintaining your properties.

Wear and Tear

Property insurance policies are designed to cover catastrophic issues such as fires and burglaries, not general wear and tear. Therefore, they will not cover the cost of replacing the roof or siding, or any basic maintenance required to keep your property in fair shape.

Damage from Vacancy or Non-Occupancy

As with wear and tear, any damages accrued from property neglected due to vacancy are not typically covered. However, some insurance companies do offer riders that cover liability, vandalism and fire for vacant or unoccupied properties.

Determining a Replacement Cost Assessment of Your Property

No one likes to submit claims for damaged property, and the biggest challenge for property owners is to find the best, most accurate way to calculate the current reconstruction cost of their property. The property should be insured based on its replacement cost and not its market value. The replacement cost is the amount you need to rebuild if the property is damaged or destroyed, and the market value is what you could sell your property for in its current condition. Replacement cost offers more protection because it factors in the current cost of building a replacement structure, including materials and labor.

You could do the calculations for replacement cost yourself and determine building cost per square foot in your area and then multiply that by your property’s square footage. You will also need to factor in the labor, the cost of flooring, building supplies, fixtures and exterior features.

You could also go online and access a Home Reconstruction Website Calculator, similar to what insurance companies use for their home value calculations. After various questions are answered, the calculator will provide you with the current assessment to rebuild your property based upon the information you provided.

A third option is to hire a property appraiser who will research local market rates for construction, materials and labor to produce a report that puts a replacement value on your property.

We Can Help

An experienced professional REO property preservation team can abate the stress associated with property maintenance, help you in determining a replacement cost assessment of your property, make repairs and provide you with ongoing status reports on each of your REO properties.

If you are seeking more information about what an REO property preservation company can do for you in the Baltimore area, please contact First Freedom Preservation today. Using a professional transparent process, we offer full property maintenance, fulfill regulatory compliance, as well as offer tenant occupied services.