Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
I've recently been reviewing insurance policies and making some tweaks, I'm curious for you other landlords what do you set your deductibles at? Also for those of you who have filed a claim, how much does your insurance go up across your other properties? I'm fortunate to be inexperienced when it comes to insurance claims.
I have my set my deductible at $5000. I had to file a fire claim at $140,000. No problem, make sure you include lost rents. I was able to secure 12 months of rent while the large rehab, permits were taken care of.
There is a thread here on BP where some insurance agents/brokers weighed in on the deductible costs. If I remember correctly the sweet spot is $5K, and is what my policies are set at. The cost for a lower deductible increases disproportionately, and generally the small claims wouldn't be worth the long term cost in increased premium. And a deductible higher than $5K doesn't really save significantly, but the cost implications of covering the first $10-15K is significant.
I am also fortunate to be inexperienced with actually making any sort of a claim.
@Matt Devincenzo yeah, I don't think I'd file a claim for most things, so the higher deductible makes sense especially given the huge premium savings for the relatively small increase in deductible.
Set it at half what you're willing to pay out of pocket. So if you're willing to risk $5000, set the deductible at $2500. The reason for this is that if you have a claim for $3000, are you going to file with the insurance company to get that $500? You wouldn't if you are smart. Your premiums are going to go up more than that and stay higher for 3-7 years. The claim is going to have to be significantly higher than the deductible before you file.
If you pick a high deductible, make sure your bank is OK with it. Most want low deductibles. However, they can make exceptions. I've had them OK $10K and $25K deductibles on homes.
As for what your premiums will rise if you file a claim, having 20 years in the insurance industry I can confidently say somewhere between zero and cancellation.
I have my set my deductible at $5000. I had to file a fire claim at $140,000. No problem, make sure you include lost rents. I was able to secure 12 months of rent while the large rehab, permits were taken care of.
@Greg M. as counter-intuitive as it sounds the uncertainty of raising rates is actually helpful. I've gone over the hypothetical algebra in my head a few times. Let's say a hailstorm destroys a $12k roof and my premiums increase by $100 for every property I own was it even worth it to file a claim? I'm starting to drift towards the idea of only having catastrophic and liability coverage.