Insurance on a 4-unit - Commerical Policy?

Question

I am purchasing a 4-unit building and requested a quote for the building.  My state-farm agent has told me that over 2 units I need a commercial policy and a separate commercial liability umbrella (I already have 1MM liability protection on my other duplex investments).

The quote at 90% of replacement cost ($322k), 12 Month rent loss and $5k Deductible is $2,968. $1k deductible is $3,289k.  This does not even include the $1MM liability umbrella which adds another $215.

I thought that this seemed very high.

What do you guys think?  What are you paying on your 4-units?

Regards,
Phil

Bill Vaughan · Answer

I would ask your local multi-line insurance agent.  They will shop it with multiple carriers.  You can also call your local apartment association(probably state level) and I would guess they would have the names of some brokers that specialize in apartments

Joel Owens · Answer

I find what is available varies by company.

I called around for my homeowners insurance and State Farm said it wasn't worth their time unless they did Auto and all this other crap I didn't need.

My wife's deceased step father is buried in Arlington so we get USAA.I was just calling around for rates.Our car is paid for so for liability we pay 22 bucks a month for insurance.The other insurance agents couldn't believe the rate was so low.It's an older car but I am cheap! :)

I don't own any quads currently.I can tell you from some of my clients that do the policy comes out to around 1,700 annually a quad.

If you have a bunch of quads some companies will offer to put them all under a group policy saving even more money but it varies by company and their offerings change from month to month.

Have you checked the claim and insurance history for this building.If the building has had excessive claims in the CLUE report it might cause the rate to be higher no matter who you cal for a quote.

So find out if it's the building or the carrier causing the high quotes.

Chris G. · Answer

Just from my own experience, I think multi-unit buildings of this size should usually be around $50/month per door approximately.

That quote puts your per door at approx. $66/month, which is a little high -- and thats even with your $5K ded.

Phil C. · Answer

Thanks for the tips everyone.  I'll let you know how it turns out.

- Phil

Joel Owens · Answer

You can order a report here:

https://personalreports.lexisnexis.com/fact_act_claims_bundle/landing.jsp

CLUE reports explained here:

http://www.frascona.com/resource/jag403clue.htm

Steve Babiak · Answer

2 to 4 units is still residential, UNLESS there is a storefront or some other commercial unit; in that case, it would be a commercial property.

Phil C. · Answer

Just a quick followup.  I received another quote and while closing isnt until August, it was over $1k less expensive.

Bill, I looked on the apartment association website for another agent as you suggested and so far it has worked out.  Thank you.

Kevin Prigge · Answer

Phil,

Give Rick a try, he hustled to get a policy written for me a few weeks back and seems to be ok.

Rick J. DeKoter Agency, INC.
[REMOVED]
Edina, MN  55436
[REMOVED]

Sharad M. · Answer

Phil,

Try American Family Insurance. I don't have a contact in your area, but when I was looking for insurance, American Family had the best insurance policies at a great price. And if you are going to be living in one of the units, you should be able to get good price.

Another great company is Shelter Insurance, but I don't think they do business in MN. I just insured a 4 unit with Shelter Insurance - $1 mil liability coverage, $25k rent loss, w/vacancy clause, $125k of coverage. My insurance premium is a around $950. All 4 units are rental.

Good luck!

Phil C. · Answer

Nate,

I am going to owner-occupy this property. The insurance agent mentioned that I have gone over their "total unit" threshold which is why i need to go commercial.  I have an LLC for the other properties but not this one.  I will once I move out or possibly before that.

Joel,

This is the first I have heard of a CLUE report.  Can I request this from my agent?  I did have a claim on my SFH a couple years ago for a new roof/siding.  This could be part of the reason.

I will be getting another quote soon.  My hope is to cut this by almost half.

Thanks,
Phil

Insurance on a 4-unit - Commerical Policy?

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