Insurance
I am new to this...i am closing on a 2 family that I plan to rent out (both units.) Title will be held in the name of my LLC...can anyone advise as to the best strategy of insurances, what types and what limits I should carry to protect myself in this sue happy world we live in???THANKS!
Don't go cheap on the replacement value is my biggest suggestion
This may help you:
http://www.thecreativeinvestor.com/modules.php?name=News&file=article&articleid=438
Best regards,
Tim
Thanks very much for your responses!
Best regards
No problem. If you have specific questions, feel free to PM me. Best regards,
Tim
I am an Insurance broker in California that specializes in writing habitational properties. The suggested website from the previous reply is a very good source of information. A broker or agent can get help explain your options indepth. It is very important that you calculate the proper replacement cost value of your property. In Ca, I use about $165/sq ft to calculate the replacement cost of apartments. You want to look for inflation coverages to cover any increases in material cost during rebuilding after a catastrophic loss due to natural disasters. The hurricanes drove up the prices of particle board and would have increased the replacement cost of your property. In Ca, a duplex is considered as a homeowner's policy, not commercial. You could buy a standard fire policy to cover your dwelling but require the tenants to buy renter's insurance with a min $500K in liability stating your LLC as an additional insured. Go speak to broker. They will be much help
A duplex is considered a "homeowner's policy" even if both units are tenant-occupied?
Anything 4 units or less is considered "Personal Lines" Business. It's not a standard Homeowner's policy. When buying insurance for a 4-plex or less, you buy a standard fire policy (DP-3). It's a homeowner's policy minus all the extra coverages such as theft and person property coverage. Liability is included, but you might want to suggest that tenants purchase renter's insurance. Renters will cover everything that you shouldn't have to. Tenant improvements are included in the Renter's insurance as well as personal property coverage and theft. You should include on your DP-3 coverage building ordinance and coverage for inflation costs. If anyone ever needs insurance questions answered, contact me by email or something.
Quote:
On 2004-10-28 17:35, clam63 wrote:
Anything 4 units or less is considered "Personal Lines" Business. It's not a standard Homeowner's policy. When buying insurance for a 4-plex or less, you buy a standard fire policy (DP-3). It's a homeowner's policy minus all the extra coverages such as theft and person property coverage. Liability is included, but you might want to suggest that tenants purchase renter's insurance. Renters will cover everything that you shouldn't have to. Tenant improvements are included in the Renter's insurance as well as personal property coverage and theft. You should include on your DP-3 coverage building ordinance and coverage for inflation costs. If anyone ever needs insurance questions answered, contact me by email or something.
Great advice, Clam, especially on the requirement for tenants to carry liability insurance. The more coverage, the merrier, at least in the event you have a liability claim staring you down. I would personally consider anything that is tenant-occupied as "commercial" business, from an insurance stand-point. If possible, combine units/locations on a master or "blanket" policy. Don't forget to add "rental loss" on your contract, if not included. Most importantly, don't extend your "personal" liability from your HO policy to the rental units. Remember as well that many carriers won't insure properties not owned by an individual (LLCs, Corps, etc...) under a DP-3. Make sure the entity that owns your property is the first-named insured, or you may run into coverage issues if the policy is not written properly.