Insurance On Income Property
Hello All,
I am in the process of purchasing my first rental income property. I am suprised how many insurance agents wouldn't even give me a quote for insurance. Is this unusual? Also, the property and its income (hopefully) is held personally. How much coverage is adequate to protect myself? Thanks!!
Have you talked with the insurance carrier for your homeowners insurance. Many homeowners policies will extend liability to a rental property and add hazard coverage for a minimal premium.
How much is enough (liability insurance I guess)? The answer depends upon how much is enough for you to sleep at night. A constraint may be the maximum amount that your insurance carrier will write.
As Dave said, your home owners insurance can usually ad 3-4 properties under you current policy.
When you have more properties, you may want to switch to a commercial coverage. It will probably take several calls from your yellow pages to find one. While I have properties in cities, Farm Bureau was able to quote me a great commercial rate.
Good Luck!
One of the drawbacks to "tying in" your homeowners is just that. You put your homeowners insurance and potentially your personal assets at risk. As a prior post pointed out, a commercial policy is the better option, even for your first property.
What size and type is the property?
What were the grounds that the agents used?
There are many residential insurance agents that ONLY do insurance policies for SFR's and/or homeowners.
You don't go to the grocery store to buy your lumber. If you need a commercial insurance policy you need to co go someone who writes commercial insurance policies.
Congratulations, the first of many.
You really should talk to an Insurance Agent who writes commercial coverage.
Each property has its own unusual characteristics and an examination of the income property should be conducted by the Agent. After all he is someone that you will probably be doing business with on a continuing basis. So put him to work. Go over his suggestions and write the policy accordingly. Sleep well.
Managesticaly Lucius
When I was doing some insurance research, I found that Allstate seemed to be a good policy for investors. It was the only one that I found that would let you exceed the industry standard of 4 units before forcing you to go with a commercial policy. One agent told me they would go to ten units, and another told me it was unlimited. Going with a commercial policy has the advantage of much higher liability coverage, but it is very expensive per unit if you only have a few units.
I did not go with Allstate so I can't really recommend them. This didn't have anything to do with the company. I have a very complex investment situation that lended itself better to using various carriers for different situations.
The commercial policy, in my opinion , more importantly allows you to disassociate your homeowners/personal liability from your rental property exposure as well.