How High Is Your Insurance Deductible?

13 Replies

Hello,

I am working with an insurance broker to lower my insurance payments to increase my rental cashflow. I currently have a $1,000 deductable and considering raising it. How high do you folks have it? Any other discounts you know of?

We have ours at $2,500. You have to go with what you're comfortable with, a number you know you will always have on hand in case the worst happens. We own 3 multifamily rentals, so we always have more than that in the bank.

@Kimberly T. ,

What discounts do you have for your rentals? I heard if you require the units to be smoke-free you are eligible for a discount, for example.

@Joe Mercer We don't really have any discounts (unless you count multi-policy). I simply called a few insurance companies/brokers, gave them the criteria I was looking for in coverage, gave them info about the properties, and then compared quotes. I was shocked at the wide variety of quotes - some were double or triple what others were charging.

Mine are either $2500 or $5000, I usually use insurance in case of major damage and will pay for the minor stuff myself to have a smaller premium. But there are different schools of thought on it.

Medium apartment logoAndrew Syrios, Stewardship Investments | http://www.StewardshipProperties.com | Podcast Guest on Show #121

Originally posted by @Andrew Syrios :
Mine are either $2500 or $5000, I usually use insurance in case of major damage and will pay for the minor stuff myself to have a smaller premium. But there are different schools of thought on it.

Mine are $3000 and I agree with Andrew's viewpoint on when to file a claim.

I am at 2,500 for all my mult family properties. I agree with above for small stuff I would rather pay out of pocket as to maintain a claimless insurance record for as long as possible and to keep premiums down low.

regards,

Chris

@Joe Mercer - $5000 for me. Savings on the premiums will add up quickly when you have several units. You can save enough to cover that higher deductible pretty fast.

@Joe Mercer I just had a quote with 2% deductible on $107K dwelling. This is a saving of about $10/month vs 1% down.

@Kimberly T

@Andrew Syrios

@Gautam Venkatesan

@Chris Masons

@Bryan L.

@Joe Fairless

@George P.

@Jojo Toto

I wanted to get earthquake insurance because my properties are only a few blocks away and if we got a good one my whole portfolio would be lost. There is only one company and although their policy is not to expensive the deductible is very high. 10% of their replacement estimates which are almost 3 times what I paid for the properties. Anyone bitting the bullit on earthquake insurance?

@Joe Mercer

We don't have earthquake insurance on our SoCal properties (our home and a triplex). We are structural engineers, though, so we actually did some minor retrofits to our house on our own since it is raised foundation. Our triplex is a single story, slab on grade building, so it is likely to be fine in a moderate quake. In fact, that quake last month in La Habra was only about 7 miles from our house, and we only had a couple hairline cracks in the stucco on one of our wall piers at our garage, that's it. And it shook us pretty good. Of course, we only plan on living in CA for a few more years, so we're basically betting that we won't have significant damage before we sell and move.

The type of construction (wood framed/cmu/steel, single story/multi story, etc.) and age of your buildings, the type of soil they are on, and the proximity to a major fault would have a significant impact on how likely they are to be seriously damaged in a quake. If you plan to stay in that area long term, it might be worth investigating that.

Your deductible should be an amount you can afford to pay out of pocket. Only insure for an amount greater than you can afford and you will pay lower premiums and carry a risk you can handle.

Some discounts to explore are multipolicy, tenant screening, claims free, carbon monoxide detector, smoke detector, alarm, deadbolts, fire extinguisher, using a property management company, age of home, new purchase, eviction search, requiring renters insurance for the tenant, and more depending on the company.