Estimating Insurance Costs
I'm curious how you all estimate insurance costs when quickly analyzing and evaluating a deal to see if it's worth pursuing further. Obviously the principle and interest will be determined by your lender and taxes can be found online through the county property appraiser but what is the most effective and accurate way of estimating the insurance without having to call about each property you are simply analyzing quickly to determine if it's even worth considering? Thanks in advance!
it will vary but I usually guesstimate 35-100/mo depending on the size of the home, mortgage amount, and deductible amount.
@Jassem A. Is there any website that you can input property information or a properties address and get an estimate of insurance cost for a particular state, city or county that you know of? Or any general % that people typically account for such as they do for CapEx, Vacancy, Property Management, etc? Or a general "rule of thumb" like the 70% rule or the 2% rule?
VPIA has a portal where you can enter in the address and amount of coverage etc but they are only in Virginia. I pay 251 a year for over 200k of fire coverage with them but that's pretty much the only coverage I get. USAA also has an online insurance quote tool and I'm sure other companies have them as well. Some ask more questions than others. REIGuard also has an online form where you can get a quote on coverage and it doesn't require a lot of fields. REIGuard will also insure for actual cash value instead of rebuild cost. Rebuild cost is more expensive especially with older homes but may be the way to go depending on the amount of the mortgage.
@Jassem A. Thank you for the information. I'll check around different insurance providers websites and see if they have an online tool that I can use just to get a rough estimate.
@Jassem A. Thank you for the info and links I will check them out.
@Jassem A. Also is the $50/month per $100k rough estimate a rule of thumb that is known and people use or is that an example of what you have found specific to your market and for you?
It's just my own rule of thumb based on past experiences insuring my own properties. If you end up with forced placed coverage then you can expect the number to be double.
@Jassem A. Mind sharing what forced placed coverage means exactly? Thank you.
Do you have windstorm insurance in Florida Because is coastal? Windstorm ins is can be very expensive. I'm from the Houston area and we need home owner and windstorm by law.
Originally posted by @Brian Garrett:
@Jassem A. Mind sharing what forced placed coverage means exactly? Thank you.
Forced Placed is when the lender buys insurance for you because you've failed to provide them proof you have your own. It's a lot more expensive since they don't give a crap about the cost (since they bill you) and it's an "at will" program that has more flexibility thus higher cost.
@Cody L. Thank you I will definitely have my own so this won't be an issue.
Insurance costs Varies A LOT based on locale, neighborhood, etc. Along with size, deductible, etc. Find an insurance broker that specializes in investment real estate and they can give you rules of thumb for YOUR market. We have companies in the Houston market that offer a single blanket policy, so once you are set up with them, you can just go online, input the info and add a property or even take it off (as in a flip) or change status (vacant to occupied). All without talking to an agent or filling our paperwork.
@Tom Cooper Thanks for your feedback Tom I will check and see if any local insurance brokers know a good general rule of thumb for Palm Beach County which is the area I'm investing in.