Home Insurance Cost Estimate

7 Replies

I know there are many factors involved, but generally when analyzing rentals, what estimated amount do you input for the cost of insurance? This is the one operating expense that I just have no clue on. I've hear some folks pay as low as $80/ mo and other $220/ month on a 200-300k home.

It depends on location assuming based on your profile that you are in Texas.  TX is higher than many other areas of the country a house in San Antonio could be $800/ year while one along the gulf coast could be double that.  FYI in CA the insurance could be almost half that

Originally posted by @Aaron K. :

It depends on location assuming based on your profile that you are in Texas.  TX is higher than many other areas of the country a house in San Antonio could be $800/ year while one along the gulf coast could be double that.  FYI in CA the insurance could be almost half that

 More like 3-4 times that

@Parker Smith there are A LOT of variables here but I see a ton of insurance policies and I'm forced to estimate them before someone buys a house so while my technic isn't guaranteed I think it works decently well.  I use $1200 per year on any home that is $150k or lower.  From $150k-$220k I use $1800 per year and for $220+ I use $2400 per year.  Often it is lower but when I estimate I need to be conservative.  If it ends up lower, then everyone is happy.  If it becomes higher...then that could be an issue.  Hope this helps in some way.  Thanks!

@Parker Smith Not all providers and insurances are the same. You need to learn to read and valuate your insurance (and for that I recommend Every-Landlords-Property-Protection-Guide) to know what coverage you get and what you don't and is extra. 

The premium can change depending on:

  • actual replacement vs cash value
  • liability protection level
  • vandalism clause or not
  • medical expenses level
  • protection of rent income or not
  • water backup or not
  • rebuild code update or not
  • demolition removal or not
  • type of house (1 story vs 2-story), 
  • type of construction (e.g living space above garage) and materials (brick, stone vs. wood siding), or roof
  • multiline discounts
  • etc.

We pay about $6-800 for ~220K rentals in RR. I use 0.5% ARV in my calculations. Keep in mind you'll also need Umbrella insurance. And, depending where you are in your investing quest, you'll need Litigation Insurance.

Forgot to include:

  • history with the provider, 
  • claims history and CLUE report/score
  • credit score (maybe)

depends on your risk tolerance, coverage desired, credit score, property history and your claims history

ballpark for that price house assume 75-135 mos +/- depending on the above.