Property Insurance

[William Edwards]

I am working on a deal to purchase my first 4-unit apartment building. I was under the impression that I could insure the property as an owner/occupant with a residential homeowner's policy. However, I learned on Friday that because I would hold the property in the name of an LLC instead of in my own name I would have to insure it under a commercial policy.

What do I look for in a good commercial policy? Are there any coverages that I should have or not have? Also, should I work with an independent agent/broker to shop for the best coverage deal or should I go with a specific insurance company?

[Timothy W.]

I'm surprised you can't get a landlord policy. I would check into that. You're looking for pretty much the same as a homeowner's policy. The two major differences are that while you may have the same coverage on your structure, you typically have much less coverage on your contents and sometimes this coverage is limited to appliances or a specific list of items. The second difference is that you will have "loss of rents" coverage, which you don't get in a homeowner's policy, which pays you for any rents lost during repairs from damage that is covered.

I like independant brokers because the truth is carriers put huge pressure on their brokers to sell their stuff whether it's best for the client or not. Make sure you get a replacement cost (RCV) policy and not just and actual cash value (ACV) policy.

Any other questions, holler.

Tim