Homeowners insurance for multi-family

13 Replies

Hi all!

I'm in Chicago and have an offer in on a 4 unit multifamily in the suburbs.  I'm shopping around for homeowners insurance - do I actually have to call all these different insurance companies?  Rates are considerably higher than I expected based on what the seller had quoted, which I understand won't be perfect but it's almost twice as expensive.  

Does anyone have any tips / strategies etc. for finding the best rate with as little calling around as possible?

Thanks!

@Jaclyn Spinelli unfortunately insurance is one of the line items that has gone way up since COVID. The price of lumber and renovations, in general, have also increased, so build your margins accordingly. Yes, I would continue to call insurance companies. Try to reach out to local REA's or network with folks local to you here, and maybe someone can give you a good recommendation.

Hi @Jaclyn Spinelli - Which suburb is the 4 unit in and how much did they quote you for insurance?

I have some decent contacts for insurance agents that tend to work with real estate investors.  A couple of our brokers so they can get you the best rate if that is your biggest concern.  

Personally, I just use my state farm agent just because I appreciate the relationship that we already have.

@Jaclyn Spinelli - Rates are up a ton in COVID due to raw materials prices and the cost to rebuild a home at virtually all time highs. If you are comfortable with more risk, you could take a policy out that would only cover the purchase price of the property and not the rebuild costs. 
The risk here is that if there is a fire or anything to your property, they will only give you back the amount of money you paid for it, which will be a lot lower than the cost to rebuild. I would consult a few insurance agents in your area to see what the differences are in rates and what your risk tolerance would be to that.

Thanks,

Sam

Hi Jaclyn, I'm an insurance broker located in Northbrook and I have 30 A rated companies I can shop with for your insurance.  Please message me is you are interested in getting a quote.  Thanks, Alan

@Jaclyn Spinelli As others have suggested, find an independent insurance broker who specializes in the REI space, and try State Farm (they are competitive in their home state of IL). I'm sure you can get 4-5 contacts just form the posters above. I would not blindly call brokers as everyone will say they can help you.

@Jaclyn Spinelli

I specifically quizzed my insurance guy on this question and his answer is pretty fuzzy. Things I know for sure are, If you are buying a property strictly as investment and not owner occupied it will be a higher yearly rate. So that might be one of the reasons for you getting a higher quote than expected. Much like a credit score, insurance companies also assign scores to different properties/areas/individuals, so sometimes the calculus just doesn’t work out in our favor.

@Jaclyn Spinelli   keep in mind you have no idea what the sellers coverage is or what kind of history he has with the company. Call a couple of independent brokers for the best deal but make sure you review what coverage you want particularly regarding liability. 

Originally posted by @Jaclyn Spinelli :

Hi all!

I'm in Chicago and have an offer in on a 4 unit multifamily in the suburbs.  I'm shopping around for homeowners insurance - do I actually have to call all these different insurance companies?  Rates are considerably higher than I expected based on what the seller had quoted, which I understand won't be perfect but it's almost twice as expensive.  

Does anyone have any tips / strategies etc. for finding the best rate with as little calling around as possible?

Thanks!

 

If you have an insurance agent for your car or current home then ask them for a bundle price to include the multi-family.

@Jaclyn Spinelli this is a challenging topic for sure. When our clients go under contract, I always send them referrals for a few of the best brokers I use or have used in the past on my buildings. I also have been unpleasantly surprised by the increases this year, and one of my six units in Cicero went up almost $1000 a year... To be fair, the replacement cost on a lot of our buildings in Chicago is very, very high due to the quality, masonry construction.