Insurance coverage for 6 unit property?

Question

What to look for when taking insurance for a 6 unit property?

Sarah Downey · Answer

Hi Sandy,

I would check out OBIE or Steadily. They specialize in landlord policies and should be able to assist! We love working with them.

Jason Bott · Answer

@Sandy Sandy @Bhavya Parimi

At a minimum, you want your policy to include General Liability, Property coverage & Loss of Rents.

Here are very brief explanations of each and what to look for.

General Liability – This covers you against claims of Bodily Injury
and Property Damage.  Ideally $1,000,000 per Occurrence.

*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.

Property – This protects the building from certain causes of loss such as fire, wind, water, etc.

Loss of Rents/Business Income – This coverage replaces your rental income if the building is damaged by a covered loss.

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

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.

Jay Chang · Answer

Hello, buddy! It's a good move that you're stepping into the real estate scene with a comfortable six-unit building. Let's talk about insurance now.

Consider insurance as the superhero cape for your property. You need insurance that functions more like an enhanced safety net. Start by comparing quotes, coverage limitations, and the contents of each policy with others. Choose carefully who you accept the first person who winks at you.

Investigate various insurance options. There are homeowners', renter's, and even umbrella policies. Select the one that best fits your property, much like a custom suit, as each has unique superpowers.

Think about the unforeseen. You never know when Mr. Murphy and his laws will rear their head, so be sure your policy covers you in the event of natural disasters like floods, fires, or an invading raccoon army.

Let's now discuss liability. Because, let's face it, life can be unpredictable and lawsuits are never fun, you want coverage that protects you from potential lawsuits.

Finally, don't cut corners. Budgeting is important, I know, but if you cut corners on insurance, it's like driving without a seatbelt—not a good idea. Invest in quality coverage; it's the super hero shield for your home.

To put it briefly, compare prices, look into your insurance options, be ready for anything, think about liability coverage, and don't be frugal when it comes to your property's superhero cape. Cheers to becoming a real estate superhero on your journey!

Zachary Ware · Answer

You will look for liability, property, and loss of use. I would recommend getting your coverage at 100% of the replacement cost. If you plan on using a lender for the purchase, ask them what their minimum requirements for insurance are.

Courtney Urbanek · Answer

Sandy,

Insurance is a very personalized experience. A lot depends on your risk comfort level, where the property is located, how old the property is, etc. With that being said, here are some items you may want to consider.

·         Actual Cash Value or ACV (the amount to replace your damaged or stolen property minus depreciation at the time of loss) vs Replacement Cost or RC (what it costs to replace your damaged or stolen property regardless of depreciation.) ACV may be less expensive but could cost you when depreciation is applied to a claim.

·         Always carry enough liability coverage to protect your assets. As a minimum, you should carry $1MM per occurrence. The larger the portfolio, or the more units in one building, the more liability protection you should consider.

·         Ordinance and Law Coverage helps protect against additional costs you may incur to bring your damaged property back to code after a loss. Building codes change over time, so it’s a good idea to have this coverage if your property is older.

·         Loss of Rents or Business Income Coverage provides coverage for your lack of rental income if your tenants are forced out of your property due to a covered loss. Some policies have built-in coverage to a certain limit, such as 12 months. Other policies may have an endorsement you must purchase at specific levels of coverage.

·         Most policies have exclusions for losses such as earthquakes, water and sewer backup, and flood coverage. You can typically buy these coverages back through endorsements. Make sure you understand how each coverage may apply to your property before purchasing.

·         Special Form coverage is the most comprehensive. With Special Form, unless there are specific exclusions listed within the policy, the coverage is afforded to you in the event of a loss. Be sure to review your exclusions and endorsements page to make sure you are covered for what you want. Many insurers often exclude Theft.

I hope this helps you find the right insurance to fit your needs. Good luck!

Mason Weiss · Answer

Lowest cost and best protection, don't overthink it.

Insurance coverage for 6 unit property?

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