Investor · Orange County, CA · Member since 2018 · 42 posts · 16 votes
Dear BP,
I have a couple of ADU units in single family rental properties and am looking to make sure they are properly covered with insurance. I have received contradictory information from insurance agents - my first agent insisted that a single family home landlord insurance includes protection for a separate structure, and that it would be sufficient to cover the ADU. However another agent says the ADU is a separate dwelling, and that it is specifically not covered. He recommends a second insurance quote for the ADU. The actual language in the insurance would seem to indicate the second agent is correct, and of course insurance companies would fight to pay as little as possible in the event of a major claim.
How are investors going about this problem? Are there multi-unit contracts that also apply for ADUs?
I ran into the same issue but ultimately went with a policy for the front house and a separate policy for the back house. I felt as though this was more logical than a master policy for both rentals. Thank you...
I can understand your confusion. The base homeowners policy does not provide the necessary Liability coverage for the rented unit. Depending on the Insurance company and the location of the unit (free standing building, over garage, etc.) there are different ways of handling it. Many companies can add an endorsement to the Homeowners for the unit. If it is a separate building, the company may want insure that on a separate policy with. If you do insure it on a separate policy, I would recommend using the same company as the could be a question of what policy responds if someone gets injured outside of the unit. I had one company that, for a home & rented dwelling on the same property, wrote a Homeowners and included the Liability for both and then we did a separate policy for the 2nd building.