Insurance Coverage Options

[Allen Tracy]

I'm a new investor trying to figure out what most do for their insurance coverage.  The quotes I'm getting seem to be a bit more than I had been running through the calculator.  What kind of coverage and deductibles do you like to have.  The quotes I've been getting have the following:

Dwelling
Personal Property
Loss of Rents
Premises Liability
Medical Payments
Vandalism/Malicious Mischief
Water Backup of Sewers or Dains

The properties I'm looking at are in the $90k-$130k single family and duplexes in the Columbus area.

[Jason Bott]

@Allen Tracy 

At a minimum, get General Liability (Premise Liability) and Building coverage (Dwelling Coverage).

1. 1. General Liability – This covers you against claims of Bodily Injury and Property Damage.

Bodily Injury – This is the most common coverage everyone is concerned about and rightfully so. These are the most common types of claims. It can be anything from a tenant tripping on a step, falling from a balcony, a guest or passerby slipping/falling on the sidewalk.

Property Damage – Example, your building starts on fire, and causes damage to your neighbor. Your ceiling comes down on tenant’s property.

1. 2. Property coverage – This protects the building from certain causes of loss, like fire, wind, water, etc.

Some secondary coverages you should include

1. 1. Loss of Rents/Business Income – This coverage give you the equivalent rent $

Property coverage highlights,

1) Ideally have Replacement Cost, not Actual Cash Value (ACV). Sometimes on older rentals, ACV may be the only option

2) Special Form, if they don't offer that, then Broad Form. If they only offer Basic coverage, be aware water and theft claims are excluded, and some may exclude Vandelism.

3) Loss of Rents equal to 12 months of income

This is not a complete list, but are generally the most impactful at the time of a claim.

Lastly, most investors don't take Personal Property or Water Sewer Back up.  They choose to save the $ and take on the risk.

Hope this helps.