Home vs Landlord Insurance: Owner occupied multi-family

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Home vs Landlord Insurance: Owner occupied multi-family

Jeremy Vargas
New York City, NY · Member since 2015 · 2 posts · 0 votes

Hello BP, 

Hope all is well. We're about to close on our first two unit multi-family home and was looking for some help on which type of home insurance to purchase. We plan to live in the first unit. But I don't want to carry two policies, or is that the only way? 

Please add some insight so I can make the best choice for my situation. 

Thank you for your time,

Jeremy V.

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  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
    10y

    @Jeremy Vargas

    Best to speak with an insurance broker in your area as things could be completely different.

    Here things are not handled consistently for duplexes (in our experience), but for triplexes, quadraplexes and multi-unit buildings, you would typically carry "landlord" insurance on the building itself and would have renters insurance for your personal effects within your own unit.

    With duplexes, years ago I was advised I would require homeowners on my unit and landlord insurance on the other (it was a side-by-side with two separate lots).

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  • Ross Denman
    Real Estate Consultant · Whitestown, IN · Member since 2014 · 549 posts · 933 votes
    10y

    I am in Indianapolis and I always recommend my clients to have commercial real estate insurance. If home owners insurance realizes that you are renting your property there rates will usually go up higher than companies who specialize in rentalsrentals anyway. If they are not aware, they may not even cover some issues either. Traditional home owner's insurance isn't always comfortable with the new liabilities that comes with rental properties so their coverage will likely be less and the policy may end up being more. 

    If you talk to an agent, they should should be able to create a policy that takes your living in one of the units in to account as you may be able to help mitigate some risk. At the end of the day, it will always cost more to protect yourself against unknown people, even if you live in the same building. 

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  • Jason BottPro Member
    Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
    10y

    @Jeremy Vargas Since the property will be owner occupied, you will need a homeowners policy.  If you were not living in it then it would be a landlord/Dwelling fire policy.

    Your renter will want to carry a renters policy to cover their personal belongings and for their personal liability.  You will also want them to carry a renters policy as an added layer of liability protection for you.

    Any personal lines agent can help you with this.

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  • Louise A.
    Investor · Seattle, WA · Member since 2011 · 253 posts · 112 votes
    10y

    @Jeremy Vargas

    My residential insurance is cheaper and offers much better coverage than my commercial policies.  My small rentals are covered through AAA. AAA doesn't mind that I'm renting the properties as long as I'm a 'mom and pop' operator.  PM me if you have any other questions.  

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  • Jeremy Vargas
    OP
    New York City, NY · Member since 2015 · 2 posts · 0 votes
    10y

    Please pardon the delay and thank you all so much for your responses. 

    We've decided to obtain a Homeowners policy.  Our closing is tentatively scheduled  for the end of May, so we've contacted brokers from AllState & State Farm in our area.  Also, our (new) tenants lease is due to expire on 6/30/16, so based on your feedback, we will request that they acquire rental insurance as a condition of the new lease.  

    This is my first post and I truly appreciate everyone's support on this site.

    Jeremy V

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  • Logan AllecBusiness Member
    Accountant · Los Angeles, CA · Member since 2014 · 1k+ posts · 980 votes
    10y

    I bought homeowners insurance for my fourplex on my insurance broker's recommendation (I live in one of the units), but upon the insurance inspection after closing, the insurer made me switch to a more expensive landlord policy.

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  • Jason BottPro Member
    Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
    10y

    @Logan Allec  What was their reasoning to make you switch?  I am working with a few first time landlords who are trying to purchase 4's as their first rental & home.  It's more of a challeng to get the right insurance carrier involved who is willing to offer a home owners coverage's on a 4U.

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