Rental Property Insurance
I own 20 single family prooperties and would like to find property insurance that would give me a single price for all properties and handle under 1 bill. I would also be interested in any ideas where to get lower costs than Allstate.
I assume that you are talking about hazard insurance and not liability insurance. I am not familiar with getting a single policy for multiple SFH. What part of the country are you in?
Our properties are located in NC and SC. I am talking about hazard insurance. On the liability side, is it best to have one umbrella policy and put each property liability as low as possible?
I have one commercial property insurance policy that covers all of my rentals and it is with Westfield insurance, this is sold thru independent insurance agents. I have had to use them a couple of times and there has been no hassle and they paid off like they were supposed to. It is also replacement cost insurance.
Hope this helps:
If one of your single-families caught fire last night, are you certain it is insured properly? If a spring storm blew the roof off of your 12-unit apartment building, would you have
coverage for your loss-of-rents? Is your subject-to exposure protected? When it comes to insuring your investment properties, it is best to know what protection you have, or
don’t have, before a claim! It is always nice to save a few dollars to add to your net income, but make sure you are aware, and more importantly, comfortable with your coverage levels and options.
ACV vs. Replacement Cost:
Make sure that you understand the difference between the two options. Also understand what a coinsurance penalty is, and how it may apply to your units. Every property, and property owner, for that matter, is different. Your comfort with how these options affect your coverage is vital for you to make an educated decision on which option to carry per property. ACV may be “cheaper”, but could cost you when depreciation is applied to a claim.
Liability Limits:
Always carry as much liability protection as you can afford. As a minimum, you should carry $1,000,000 per occurrence. The larger your portfolio, the more liability protection you should have. Surprisingly, there is a minimal premium charge in most cases to double your protection. An umbrella policy is a method to provide liability coverage beyond the standard $1,000,000 or $2,000,000 limits. An umbrella is usually more cost-effective when you have more than one type of liability exposure.
Other Structures and Personal Property Coverages:
Don’t forget to protect against loss of detached structures, such as garages, sheds, and outbuildings. Some policies automatically include limits for these. Also remember to protect items in the units such as refrigerators, stoves, and window air conditioning units. Again, some policies may automatically provide built-in protection for these items.
Ordinance and Law Coverage:
This provides protection for additional costs you may occur in order to bring your damaged property “back to code”, as it is repaired from a loss. As time passes and building code changes, most properties are “grand-fathered”. However, the repairs that are inspected by the governing municipality are required to be to current code. Hard-wired smoke detectors and handicapped accessibility are two such examples. Without the Ordinance and Law endorsement, such work is typically not covered under your policy. Older properties and multi-unit properties are more at risk for this situation.
Loss-of-rents, or Business Income Coverage:
This provides coverage for your lack of rental income, if your tenants are forced out of your property due to a covered loss. Some policies have built-in coverage to a certain time limit, such as 12 months. Other policies may have an endorsement you must purchase at specific levels of coverage. Either way, this is protection all property owners should have.
Deductibles:
Simply stated, the higher your deductible, the lower your premium. If you are a multi-property owner, and your units are insured under separate policies, your deductible will apply, per location, if you are on what is typically referred to as a “package” or “blanket” policy, your deductible usually applies per occurrence. This could be a big difference, out-of-pocket, in the event of a local catastrophe such as a tornado.
Earthquake, Water Backup and Flood Coverage:
Most policies have exclusions for such losses. You can buy these coverages back through endorsements. Make sure you understand how each coverage may apply, respective of your chosen insurance carrier. This will ensure you can make an educated decision on whether you should have any or all of these coverages.
Insuring the Proper Entity:
Make sure you protect YOUR (or your entity’s) interests. It is not worth sacrificing the proper protection to avoid the dreaded “due-on-sale” clause. The entity that owns the property should be the first-named insured. The first-named insured is the primary recipient of policy benefits. Additional insured and loss-payee endorsements may suffice in certain situations. However, as a general rule always aim to be the first-named on the insurance contract.
Always work with an Agent you can trust, regardless if they are “captive”, or “independent”. An Agent that is familiar with our business and willing to take the time and explain your protection needs for your situation, even if they can’t offer the policy themselves. We all like to save money, but you purchase insurance for protection. Make sure you understand how it works, before you need it!
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This may help, too:
Reasons A Commercial Policy Is Better
1. Many commercial forms will include coverages such as rental loss and additions and alterations coverage.
2. To increase liability on a commercial form from the typical $300,000 to even $2,000,000 is minimal (around $50 per year for the entire contract---regardless of number of units) with most carriers
3. The generic pollution exclusion found on most personal type contracts is addressed by some commercial policies to consider/cover pollution that emanates from a heating source (i.e. carbon monoxide).
4. On a master (AKA “blanket”) policy, as you grow and add properties, the rate drops proportionately. Personal policies only insure one property per policy.
5. Related to #4, in the event of a catastrophe, such as a tornado, the deductible applies once for the occurrence, not per location.
6. The deviations to carry higher deductibles are cost-effective under a commercial policy much more so than most personal contracts. In other words, carrying a $2500 deductible on the commercial policy may save 15% of premium versus a $1000 deductible. On a personal policy, the same change my only generate half the savings…gives some food for thought on consideration of catastrophic deductibles such as a $5000 or more especially as you add more units.
7. Many insurers limit the number of units they will insure under personal contracts, and as you’ve discovered, will not consider non-personally owned properties for coverage. I don’t like the idea of the insurance company limiting my asset protection options in this manner.
8. The “fire and hazard” policy you have may be a named-peril policy only. The commercial policy can and should be written on an “all-risk” form. “All-risk” simply means that unless a peril is excluded, it is covered.
9. With our commercial policy, you have the ability to add newly acquired properties up to $250,000 automatically for 90 days. You have 90 days to call us and add the location to the policy.
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