How to Phase in Landlord Insurance Policy

[Account Closed]

My 9 unit MF is about two weeks from being ready to rent.  I have run into a bit of a snag concerning insurance.  My agent says that I can't put my landlord policy in place on the 5 unit building until I have at least 3 tenants (unit needs at least 30% occupancy before it is no longer considered vacant -- I currently have a vacant building policy on it). The 4 detached units are not an issue because I can add them to the landlord policy one at a time.

How do you usually handle a situation like this on attached units when trying to meet the occupancy rates for a landlord policy?  

Should I pre-lease until I get three tenants and have them all move in at the same time -- say July 15th or 30th?  Or just put tenants in one at a time and keep the vacant policy in place until I have enough tenants to also put the landlord policy in place?

[Chris Winterhalter]

@Account Closed 

I generally keep my builders risk policy or vacant policy in place while overlapping the landlord policy.  I do this as soon as the first tenant moves into the building.  I've talked this over extensively with several brokers.  If the intent is to fill the building after renovation then most insurance companies will honor a claim.  It is a grey area especially for smaller policies.   I generally do this until I reach the % of occupancy needed for the insurance company.  Then I can drop the builders risk policy (or let is run out) or the vacant policy.  The extra cost is worth the peace of mind in my opinion.  Generally theft is what I am most worried about on a vacant building.