San Diego, CA · Member since 2017 · 70 posts · 23 votes
I don't know much about insurance so I need to ask...
I have aquired 4 SFR rental properties and am shooting for 6-7 I have a separate insurance policy on each one. Is there such a thing as blanket insurance to have one policy that covers all my properties and would this be cheaper?
Yes there is, I found a company to do it but they wanted me to have a minimum of 12 properties. And they said my quad would only count as one property. I know an investor who has saved a large amount on insurance costs by getting a one of these policies.
Actually, you want an "umbrella policy.......$1-$2M is really cheap, it covers you above and beyond your basic $300-500k individual policies you have on each property.
@Joe Koppel Thanks for the PM. You will be able to find many commercial insurance companies that will combine all rentals onto 1 policy.
@Carl Pickens 12 location minimum is a pretty high minimum. Don't get discouraged, there are so many of these insurance programs that will combine all your rentals onto one policy, you just need to work with an agent who has access to these insurance programs.
@Emily Powell If you are referring to a policy that can handle multiple locations/buildings on 1 master policy, 2 is the minimum for some companies.
As a side note, the "Umbrella policy" phrase is misused here on BP very often. Umbrella does not refer to a master policy, but a policy that adds additional liability limits over an existing policy.
@Jason Bott That's what I thought which is why I was confused by the above thread. Could you elaborate on the comment you made about commercial companies that will combine rentals into 1 policy?
@Emily Powell investors like @Joe Koppel, who have 4-5 locations +, can start to get frustrated by all of the paperwork if their agent can only insure 1 location per policy.
The easy solution is to put all locations onto a single commercial policy.
This thread started on the topic of "blanket insurance" and that was never really answered. Blanket coverage generally refers to property coverage. Let's say you have:
- 10 SFR
- Each residence is the same construction
- Each would cost $200,000 to rebuild
In this example, you would have a TIV (Total Insured Value) of $2,000,000
The blanket question comes up because people think: "What if I get blanket coverage for $1,000,000 that can apply to whatever property is damage. As long as less than 50% of my properties are damaged I'll be ok, Right? Wouldn't that be a lot cheaper?"
The answer is no, this is a misnomer and any insurance agent offering a policy like this is scamming you. You will pay less for the insurance policy but a claim will be a disaster. In the above example, if our house burnt completely down the most the company would pay out is $100,000 (half of the cost to replace).
The reason gets into super nerdy insurance but the bottom line is you will be penalized heavily in a claim for underinsuring your portfolio. If you want to research, Google "coinsurance clause".
Blanket coverage is actually something that ADDS cost to your policy. It's a really good thing and I use it often but it's not what people think. Hope this helps.
@Joe Koppel I believe the blanket you are referring to is officially a scheduled policy. Multiple rental properties can be added to a scheduled policy or be "scheduled" on the same policy. We do that for our clients all the time. The advantage is merely to have the properties together for ease of billing and management. Some insurance carriers maintain separate policies but bill together. Others will create the single policy with multiple dwellings.
As many have mentioned, you can also have an umbrella policy that covers your properties with higher liability limits and protects you more than the typical $500K limits. But don't forget to talk to your lawyer to get your properties in a corporate structure such as an LLC at the minimum to help as well.