Rental Property Investor · Kansas City, MO · Member since 2018 · 86 posts · 38 votes
I'm having trouble finding a straight answer on this one. What kind of insurance should I be looking for on a 3-plex? This is a former single family residence that has been converted to three living units. I also plan to eventually convert the attached garage to a fourth unit.
State Farm sent a quote for a "CMP Apartment Policy," with an annual premium of $3,898. Compared to the policy on our duplex, which only has a premium of $1,120, this seems crazy high.
What kind of policy do I need for the property?
Should I insure for full replacement cost, mortgage amount, or something else?
Insurance Agent · Norwalk, CT · Member since 2016 · 2k+ posts · 1k+ votes
8y
Jesse,
I can't comment on the Direct Writers like State Farm but we represent over 30 companies that deal with independent agents. The way they insure 1, 2, 3 & 4 family buildings varies but falls into one or two general areas:
1. Personal Insurance policies - The "Dwelling / Fire" policy is used for 1-4 unit rental properties.
2. Commercial Insurance - Either a "Business Owners" or "Package" Policy is used for the rental dwellings.
Often they are named something else (aka Landlords policy) but the basic form is ususally one of the above. Which form is better for your property will depend. Often, on an individual property the Dwelling/Fire form is less expensive but that is not always the case. The Business Owners or Package policies can often handle multiple properties which saves on paperwork and may give a better rate on multiple locations.
I suggest you contact Multiple Independent Agents and interview them for their experience in insuring Rentals. If you know others who own rentals in the area see who they are using. Because of your plan to convert the Garage, ask the agents you do decide to use, how the companies they are quoting will handle it.
Rental Property Investor · Kansas City, MO · Member since 2018 · 86 posts · 38 votes
8y
Great info. Thanks @John Mocker! I've gotten another quote in from Farmers for $1,700, with better coverage than State Farm was offering. I called another State Farm agent, and they seemed to have no problem with writing a rental dwelling policy for a 3- or 4-plex. Insurance is strange...
Great info. Thanks @John Mocker! I've gotten another quote in from Farmers for $1,700, with better coverage than State Farm was offering. I called another State Farm agent, and they seemed to have no problem with writing a rental dwelling policy for a 3- or 4-plex. Insurance is strange...
Your experience is a great example of why investors need to find an agent who understands how to structure policies for investors. Both State Farm agents you talked to have the exact same product line.
The first doesn't understand how to use his product line to benefit the investor, while the second agent does.