Insurance Coverages

15 Replies

Hello DP, newbie looking to purchase my first duplex (1700sq ft, block construstion, asphalt shingle roof, approx $100K purchase price) and was wondering what type of insurance coverages and limits should I need?  My agent is quoting me:

Fire hazard policy with replacement cost at $203K (approx. $120sq/ft)

Personal Property - $10K (wouldn't think needed, only a few appliances value <$1500)

Liability - $300K - this is the biggest ?? I have

Medical Payments - $3k - Needed??

Fair Rental Value - $20,300 - This cover loss of use??

Thanks for any and all responses.

Hi Chet,

All "personal lines" agents typically quote inflated coverage values and have to include additional things that you may or may not need.  You have little choice in selecting the coverage limit because of their co-insurance requirements.

So $203k may be too high.  The $10k is most likely not necessary and you should at the very LEAST carry $1,000,000 in liability coverage.  I would also suggest you move away from a personal lines policy as you should treat your rentals as a business and separate them from your personal liabilities.  Even the IRS considers anything that generates income for you as a business activity or exposure.  Med Pay is also not really necessary on a rental in my opinion.  Loss of rents coverage is really up to you.

I would recommend working with a company who offers you a commercial policy form and options to pick and choose exactly what options you want and don't want and can also help you scale your business down the road without restriction.


Ivan

Hi! @Chet Jennings  congrats on your property purchase!! I would ask your insurance agent how did they arrive at such a high reconstruction value...I am a Farmers agent and we use a software called 360 value where you input the address and based on the area/and the number of claims and material used in that particular area the software will tell us a guestimate of the amount it would take to rebuild the home...So this is very important because it directly affects your insurance premium (the money you are paying for that specific coverage) The personal property amount should be lowered if you don't think you need this much because again this is affecting you premium and you're basically being over insured which costs money...liability at 300K is what I suggest when the owner is residing at the property if you are not living in the property and you renting it to others I would suggest 500K the maximum (for Farmers) is 1 million....medical payments to be honest will rarely be used (this is for example someone gets hurt on your property and they come after you for medical payments this would come from here) but to be honest if someone gets hurt on your property and they come after you for money is going to be more than $3K thats why its important to have the right amount of liability this is where the monies would usually come from...and loss of use is the monies that would be applied to a hotel stay while your property is being reconstructed from the covered loss that occurred...on the other hand if you are renting the property these monies would go towards the rents you would go without while the property is inhabitable...hope this helps! :)

Thanks Ivan and Yenipher for the responses.

Does anyone in the Tampa area have an insurance agent they can recommend?  I will also be needing flood insurance on this property.

I don't know building costs in your area, but off hand, $120/sf doesn't seem unreasonable to me.  Don't think I'd go less than $100/sf.

Personal property of $10k may be a bit high.  See if lowering it to $5k or $3k is possible, and if so, does it affect the premium (it probably won't).

For liability, we like to have lots of coverage.  See if you can get more, preferably $1M or higher.  If not, see if you can get an umbrella policy that puts you over the $1M threshold.  It might be cheaper to stick with the $300k liability quote here and get a separate umbrella for an additional $1M rather than trying to get the full $1M with this policy.  But you'll need to check if the umbrella has a minimum requirement for the basic policy you have (our umbrella requires us to have at least $500k liability on each rental).

Medical is absolutely needed.  Trip and fall, dog bite, a cut from broken glass requiring stitches.  Besides, you probably can't have this coverage removed, it's very common.

Yes, the fair rental value should cover loss of use.  Make sure that $20,300 covers at least a year's worth of lost rent (in case your building is destroyed and needs to be rebuilt).

Originally posted by @Chet Jennings :

Thanks Ivan and Yenipher for the responses.

Does anyone in the Tampa area have an insurance agent they can recommend?  I will also be needing flood insurance on this property.

 I'll send you a PM to the agent I use in the Tampa area.

Hi Chet,

I have a great agent in Pinellas, he'll need a recent wind mitigation and 4 point inspection and if you want flood insurance you'll need an updated elevation certificate as well (whoever is doing your survey can usually do this too.)  I'm with several others on here, get an umbrella policy that will cover you for liability up to $1m.  This is more valuable than $1M on the home as it will cover you in more aspects (ie auto accident).  From what I've been told you'll need a minimum of $300K of liability on all of your properties as well as high liability limits on your auto policies.  I'll PM you my agents contact information

Rob

Chet - we have a triplex in Clearwater, and happy to share our insurance agent's name with you.  Cathy

@Robert Curls Thanks for your input and useful tips. I would like the name of the agent you use, if you wouldn't mind PMing that to me. 

Also, anyone got a good appraiser that knows Dunedin well? thanks

I keep maximum liability on my properties and a personal umbrella policy (PUP) with a maximum benefit of 1.5 million. That sounds like a lot of money until you see what a lawsuit or a major accident or medical problem can rack up in costs. 

I think 10k personal property is lowest available for landlord coverage, I have Allstae. 

This post has been removed.

Hi-- I'm a bit late to this thread, but would also like to receive all recommendations for Tampa area agents / agencies.

THANK YOU!

@Mark J. - I have an agent I use for all of my insurance coverages, a close friend so he will take good care of you. Send me a PM on what you are looking for, whether it is owner occupied or replacement coverage on a rehab. 

Originally posted by @Robert Curls :

Hi Chet,

I have a great agent in Pinellas, he'll need a recent wind mitigation and 4 point inspection and if you want flood insurance you'll need an updated elevation certificate as well (whoever is doing your survey can usually do this too.)  I'm with several others on here, get an umbrella policy that will cover you for liability up to $1m.  This is more valuable than $1M on the home as it will cover you in more aspects (ie auto accident).  From what I've been told you'll need a minimum of $300K of liability on all of your properties as well as high liability limits on your auto policies.  I'll PM you my agents contact information

Rob

Hi Rob,

I'm under contract on my first 4plex in Tampa Bay and am looking for recommendations of landlord insurance?

Many thanks!

Matt

@Matthew Dunn - I have a good agent I use for everything, send me a PM and we can chat more. 

@Chet Jennings

"All personal lines agents" do not "typically" recommend inflated coverage values, per one of the responses above. What's most important for your success is you find an agent that you trust and can do business with long term. If you can find one that also invests in similar real estate then that's even better. You're likely going to end up with a sheet rock guy, a roofer, a flooring guy, you also need an insurance guy. 

And as stated above, you need to max out your liability. It's inexpensive to go from 300k to 1 million. I would turn around and run from any agent who isn't recommending you stack up your liability. You want as much protection as you can get between you and the worst case scenario. Good luck!