Insurance is one of those pieces of being a landlord that can make you pull your hair out.<\/p>\n
It starts off easy enough.\u00a0 When you purchase your first couple of rental properties getting insurance is generally no problem.<\/p>\n
Often you can go to the agent that provides your homeowners or automobile policy and get coverage for a reasonable price.<\/p>\n
Things begin to change however as you build your portfolio.\u00a0 Once you acquire four, five or more properties you really do not fit the mold<\/a> anymore, and you begin to be seen as a risk.\u00a0 It is at this point that insurance problems begin to arise.<\/p>\n Suddenly, without ever filing a claim your rates double.\u00a0 Or, even better, you get the notice that the company is dropping your coverage.\u00a0 I once had a company drop me only 10 days after I closed!<\/p>\n The insurance companies often do not make the process of finding, maintaining and keeping it simple.\u00a0 There are unfortunately no easy insurance answers.\u00a0 There are however several pointers that I can give based upon my experience in the business.<\/p>\n 1. Never, ever make a claim<\/strong><\/p>\n The only time you want to make a claim is if it is a total loss or catastrophe.\u00a0 You can sometimes claim minor repairs and damages, but I would strongly advise you against it.\u00a0 Every claim you make is a mark against you.<\/p>\n It stays on your record for years just like a credit report.\u00a0 After too many claims you get jacked up rates or dropped.\u00a0 It is much better in the long run to absorb the minor damage and repair costs.<\/p>\n 2. Find an agent or broker you can trust and who understands your business<\/strong><\/p>\n This will not likely be with the major carriers nor will it be easy.\u00a0 Look to your local REIA or other landlords for suggestions.\u00a0 Sometimes going to a broker who can shop your properties to many different companies can be advantageous.<\/p>\n 3. Never call the 1-800 number, even if just asking for information<\/strong><\/p>\n Doing so could be counted as a claim against you even if you do not have one.\u00a0 Instead find an agent you trust and discuss any issues or matters with them \u201coff the record\u201d so to speak before calling or making a claim.<\/p>\n 4. Use a high deductible to keep costs down<\/strong><\/p>\n You are not going to be making claims anyway, so why not have a $5,000 deductible?\u00a0 Check with your lender however as they may not allow such a large deductible amount.<\/p>\n 5. Have enough coverage to get the bank or other lender out of the way and the property cleared if something major happens<\/strong><\/p>\n This method is usually cheaper than full replacement cost.\u00a0 If a disaster happens, you can pay off the bank, clear the lot and start over from that point.<\/p>\n 6. Get liability insurance not just property insurance<\/strong><\/p>\n As a landlord you need to protect yourself from lawsuits.\u00a0 If someone slips and falls, you will need this type of insurance<\/a>.\u00a0 Increase the coverage amounts as your portfolio grows.<\/p>\n 7. Keep your properties well maintained<\/strong><\/p>\n You never know when an insurance inspector is looking around looking for a way to drop your coverage.<\/p>\n 8. Meet with your agent every once in a while<\/strong><\/p>\n Do not assume things are on autopilot.\u00a0 They are not.\u00a0 Insurance is something you need to keep up with.\u00a0 Read every notice you get and be sure you understand it.\u00a0 Plus your insurance agent can be a big help to you if you ever need it.\u00a0 Build up a good business rapport.<\/p>\n 9. Package all of your insurance needs with one company to save money<\/strong><\/p>\n For example, you can try to place your car, personal home, liability coverage and investment property coverage all with the same company.\u00a0 Insurance companies like policy bundles.<\/p>\n 10. Never ever make a claim unless it is truly a disaster<\/strong><\/p>\n I know I already said that.\u00a0 But I felt it was important enough to mention again.<\/p>\n