Type of Insurance needed?

8 Replies

Hello BP! I'm in need of some advice. My husband and I are purchasing a home in the Houston area. The property has 4 units total: one main house (will be our primary residence), a converted garage (upstairs and downstairs unit), and a pool house. So basically 3 rentals on our property.

What type of insurance makes the most sense for this type of property since we will also be occupying it? A basic homeowners policy for the main house where we will be living? A landlord policy?

This will be our first rental property purchase. In addition, does anyone have any recommendations for insurance carriers that are local to Houston or Texas that you have had good luck/great rates/decent coverage?

Thank you so much!

It will cost you a 1/3 more but get a liability rider.. the day you don’t you will regret it. 

Ask you agent will your policy cover somebody hurting their back throwing away a couch left behind by your tenants ?

You will be supposed to know that no insurance covers people getting robbed and raped. Sadly, our legal system and politicians in our state are not there for us, just there for lawyers and insurance  companies

@Emily Hobbs . I would start with the Agent / Carrier that you currently insure with. If you don't currently own a home, then, the Agent / Carrier that insures your vehicle. Lay your cards on the table as to what type of property you are acquiring and what your plans are and they should educate you on the type of coverage they have to offer.

Also a good idea to discuss with an Independent Insurance Agent and they can shop various insurance companies for the best coverage for your situation. I would pay attention to getting some type of water coverage for major internal water leaks. 

You should know by now whether the property will need flood insurance. If so, you will have to flood insurance. If the property has a downhill driveway I would consider flood insurance as well.  I added flood insurance to a property I own (not in any flood plain areas) that has a slight downhill driveway after 16" of Harvey rain over several days. Fortunately, we got no water in house, but did get on porch. 

@Emily Hobbs congrats on the purchase! It sounds like it will be a great investment!

I'm not sure on the exact insurance but I use Betsi at Secured Risk Insurance. She's friendly and knows insurance. 

Best of luck!

@Emily Hobbs ,

When you live in a property and it has portions that are rentals, it is a bit more complex than a typical landlord policy or a typical homeowner's insurance policy.

I think @Jim Cummings gave some good advice which is to discuss this with your current insurance company. If they can't help you, then you can contact other folks to see who has policies for this.

Thanks,
James

Emily,
The correct policy will be a Homeowners policy. It may be classified as a 1 family and have the liability for the 3 units endorsed on. The other way it may come is as a 4 family Homeowners policy. It could vary by company in how they handle. I would suggest contacting an Independent agent with multiple companies to see what comes back with the best price and coverage.

I would make sure the coverage for "other structures" is enough to replace the garage and pool house. Most polices have a limit for other structures based on a percentage of the limit on the main structure. That limit usually can be increased if more coverage is needed.

The other area to consider is "Building Ordinance & Law" coverage. If you could not rebuild the 2 units in the garage as they are because of changes in the building codes that coverage may help with the increased cost to rebuild to code.

@Emily Hobbs , as many have said, there are endorsements to homeowner’s policies that allow for the liability coverage to extend over rented units. I would also suggest you invest early in an excess liability, or even better, an umbrella policy.

I would recommend working with a knowledgeable independent agent to advise you on your individual circumstances.

Hi Emily!

I work with an independent agency that specializes in landlord, dwelling, and homeowners policies. We do business in 9 states including Texas! I don't think I can give you a phone number in the forums, but if you want to PM me I can give you all of our information. We have access to a TON of companies that will write all types of investment properties. And, we're passionate about making sure our client's investments are insured correctly. Give me a shout and we'd love to help you and your husband.