Property Insurance in Class C areas

Toledo, OH · Member since 2017 · 4 posts · 1 vote

I've been running the numbers on various properties in Toledo just to get a feel for different scenarios. When I get insurance quotes in lower income areas around Toledo, rates seem to go through the roof! I'm talking over $4000 premium on a $50,000 asking price property (4-plex)

Is this typical to see for higher risk areas? Would I be better off talking to local insurance agents to get more accurate pricing? (Right now I'm just going to policygenius.com to get ballpark quotes).

Anyone have rules of thumb for what's reasonable to plug in for landlord insurance based on property class, SF, # of units, price?

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Charles Carillo

Rental Property Investor · North Palm Beach, FL · Member since 2018 · 2k+ posts · 1k+ votes

@Douglas Furia

I would speak to a couple independent agents in the area that carry 15+ carriers. If there are no claims in the last 3-5 years you might be able to find a better rate. Also, if it is currently occupied, make sure they know.

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Charles Carillo
Rental Property Investor · North Palm Beach, FL · Member since 2018 · 2k+ posts · 1k+ votes
7y
@Douglas Furia
I would speak to a couple independent agents in the area that carry 15+ carriers. If there are no claims in the last 3-5 years you might be able to find a better rate. Also, if it is currently occupied, make sure they know.

1 Reply
John Mocker
Insurance Agent · Norwalk, CT · Member since 2016 · 2k+ posts · 1k+ votes
7y
Douglas, See if you can find out from local agents the factors that are driving up the rates on these properties. Could have to do with: 1. Age of the building 2. Lack of updates to the Electrical, Plumbing, Heating, Roof,... 3. Condition of the property (run down exterior, Yard has trash/overgrown. 4. Knob & Tube/ Aluminum wiring 5. Flat roofs 6. dogs on the prohibited list 7. lack of lead safe certification These and other factors can cause a problem with many companies underwriting guidelines. Find out what is a problem can help you narrow down you search.
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Andrew FidlerBusiness Member
Real Estate Broker · Toledo, OH · Member since 2011 · 384 posts · 434 votes
6y
@Douglas Furia - Hi Doug, are you looking to price replacement policies or ACV?
I have a ton of insured single family and small apartment complexes in the lower end areas of Toledo, but all of them are insured as ACV...no one (in their right mind) rebuilds in Toledo after a total loss event. I insure my properties for about 2x the purchase price with a hefty liability rider and rent-loss coverage for $450/year, duplexes $700, 4 units $900, 6 units $1100...naturally I have enough its a commercial policy.
I can recommend some agents and companies if needed...been with the same agent since I started in 2009.
[email protected]419-410-3836
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Account Closed
Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
6y
@Andrew Fidler just curious why is an ACV check for $10,000 better then a rebuilt house?
Is it just the math that you’ll pay more over the years in replacement cost premiums?

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Andrew FidlerBusiness Member
Real Estate Broker · Toledo, OH · Member since 2011 · 384 posts · 434 votes
6y
@Account Closed - it's the math that I've used two times so far in Toledo...
I buy a property for $25k (during the recession, they are now $40k) and rent it for $700.
When the property burns, I get a check from the insurance company for $50k PLUS 6 months of rent loss coverage ($3500 which essentially covers my deductible) PLUS $10k in demolition cash which pays to demolish the house and I have a grassy lot I sell for $100.
Turn around and buy two more houses, ensure they have ACV coverage and hope the tenants smoke in bed.
No one who can do math would rebuild a property in a $40k neighborhood...$150k build would be worth $70k when finished. (Then again we have a lottery so clearly folks don't handle math well) :)
[email protected]419-410-3836
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Engelo RumoraBusiness Member
Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
6y
Originally posted by @Andrew Fidler:
@Account Closed - it's the math that I've used two times so far in Toledo...
I buy a property for $25k (during the recession, they are now $40k) and rent it for $700.
When the property burns, I get a check from the insurance company for $50k PLUS 6 months of rent loss coverage ($3500 which essentially covers my deductible) PLUS $10k in demolition cash which pays to demolish the house and I have a grassy lot I sell for $100.
Turn around and buy two more houses, ensure they have ACV coverage and hope the tenants smoke in bed.
No one who can do math would rebuild a property in a $40k neighborhood...$150k build would be worth $70k when finished. (Then again we have a lottery so clearly folks don't handle math well) :)

100% agree with this.
Take the money and buy another property or properties.
It doesn't make sense to re-build.
Knock on wood it hasn't happened to us or any investor thus far.
Now watch, after this post a house will burn down lol
Much success
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Douglas Furia
OP
Toledo, OH · Member since 2017 · 4 posts · 1 vote
6y
@Andrew Fidler Following up on your initial comment - what companies/agents would you recommend getting in touch with? For ACV did you have any problem getting coverage for double the purchase price? Are insurers willing to do that even though the market value is 50% of the coverage?
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Andrew FidlerBusiness Member
Real Estate Broker · Toledo, OH · Member since 2011 · 384 posts · 434 votes
6y
@Douglas Furia - Hi Doug, I use a local agent here in Toledo - same guy for going on eleven years. His agency uses a range of insurers so I have been fortunate to be able to shop multiple over the years...Auto Owners has been my best experience so far. (I don't think posting the contact info for an unaffiliated agent is legit, anyone is welcome to message me for contact info)
ACV for double the purchase price is a misnomer my friend...my ACV is truly a number my agent recommends as being the intersection of increased coverage for minimal price. I have many, many properties purchased for under $10k that are insured for 10x that amount. I would definitely agree that insurers are annoyed to cover the property for such a ratio but isn't that the standard for American replacement insurance (market value is sales price if sold...replacement value is the construction value to rebuild...ACV is a hybrid of the two).

To compliment your question - I have had 3 claims in 11 yrs that were total-loss events and have come to find that with each major claim you run a good chance of not being renewed by that carrier.
Hope this helps, I am unsure of the metrics that go into insurance coverage, that's what I rely on my agent for. You just need to focus on someone who understand rental coverage.
Good luck!
[email protected]419-410-3836
LaPlante Real Estate
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Bob Prisco
Specialist · Cleveland, OH · Member since 2018 · 1k+ posts · 666 votes
6y
@Douglas Furia something is not correct, it has NOTHING to do with the area. We insure props for the last 10 years all over cleveland, always $600- $900, 50- 80k coverage
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Renee F.
Real Estate Investor · Dallas, NC · Member since 2016 · 43 posts · 10 votes
6y
Okay, I’m curious as to what ACV means. In my neighborhood, rebuilding isn’t even allowed because of current building codes. Yet every insurance company makes me insure it for replacement value. I’ve even argued the point! Since I’m an out of state landlord, the estimates were higher as well.
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Matt Kistner
Real Estate Professional · New Albany, OH · Member since 2015 · 4 posts · 2 votes
6y
Renee F. - most insurance companies will make you insure at their estimated replacement cost, but not all. If you have 1-4family properties I can insure anywhere from your purchase price up to the replacement cost. It can save you a bunch in premiums. Let me know if you want to look into it further.
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Sasi Raj
Fairfax, VA · Member since 2015 · 5 posts · 0 votes
2y
Quote from @Andrew Fidler:

@Douglas Furia - Hi Doug, I use a local agent here in Toledo - same guy for going on eleven years. His agency uses a range of insurers so I have been fortunate to be able to shop multiple over the years...Auto Owners has been my best experience so far. (I don't think posting the contact info for an unaffiliated agent is legit, anyone is welcome to message me for contact info)
ACV for double the purchase price is a misnomer my friend...my ACV is truly a number my agent recommends as being the intersection of increased coverage for minimal price. I have many, many properties purchased for under $10k that are insured for 10x that amount. I would definitely agree that insurers are annoyed to cover the property for such a ratio but isn't that the standard for American replacement insurance (market value is sales price if sold...replacement value is the construction value to rebuild...ACV is a hybrid of the two).

To compliment your question - I have had 3 claims in 11 yrs that were total-loss events and have come to find that with each major claim you run a good chance of not being renewed by that carrier.
Hope this helps, I am unsure of the metrics that go into insurance coverage, that's what I rely on my agent for. You just need to focus on someone who understand rental coverage.
Good luck!

@Andrew Fidler - it is an old thread but very useful information shared by you. Can you please PM me local home insurance contact that does ACV (I believe it is fixed price closer to purchase price). I really appreciate that.

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Andrew FidlerBusiness Member
Real Estate Broker · Toledo, OH · Member since 2011 · 384 posts · 434 votes
2y
Hi @Sasi Raj I have been busy rolling our property management over to another year, sorry for the delay!
I continue to use ACV coverage on my personal portfolio and have made a couple claims over the past 15 yrs investing in Toledo.
If you use ACV coverage plan on some legwork to establish the value of the claim (and don't make claims for anything small like a puncture in a roof). The adjuster will not do most of the work (and you don't want them to, your numbers will be far more profitable than theirs).
When you have a claim the issue is you have to establish the scope of the repair, THEN deduct the depreciated value of the items. (I don't know their tables by heart, this is just a ball park)
Hallway floor - 5 yrs old, 20 yr lifespan - you get 75% value
Wiring - 45 yrs old, 50 yr lifespan - 10% value
Drywall - 15 yrs old, 50 yr lifespan - 70% value
So you have to walk the job with the adjuster, define the scope of what they agree is part of the claim, then solicit bids to complete the work, then have the whole project reduced based on the lifespan calculation, and finally get a check.
I have been through about six claims in my portfolio and represented owners in about ten times that amount. In general we ensure the base quotes come through high-dollar restoration companies, we get maybe 65% of that amount, and the whole job is funded through a normal contractor with a few reductions in quality (no new hardwood floors, it becomes LVP for example).
As long as you have an experienced project / property manager on your side you will do nicely on claims.
Lastly, I chose ACV coverage for my portfolio because I am not hand-to-mouth broke...if a claim comes back a few grand short it's not a crisis. Personally, the cheaper coverage has proven appropriate in my case...each investor's position will be different of course!
[email protected]419-410-3836
LaPlante Real Estate
Website View Page
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James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
2y
Quote from @Douglas Furia:

I've been running the numbers on various properties in Toledo just to get a feel for different scenarios. When I get insurance quotes in lower income areas around Toledo, rates seem to go through the roof! I'm talking over $4000 premium on a $50,000 asking price property (4-plex)
Is this typical to see for higher risk areas? Would I be better off talking to local insurance agents to get more accurate pricing? (Right now I'm just going to policygenius.com to get ballpark quotes).
Anyone have rules of thumb for what's reasonable to plug in for landlord insurance based on property class, SF, # of units, price?

I quote stuff in Toledo in that price range all the time...Annual policies are typically in the $800 or so range. Your carrier must be trying to sell you some crazy policy.
0 Reply
Andrew FidlerBusiness Member
Real Estate Broker · Toledo, OH · Member since 2011 · 384 posts · 434 votes
2y
@James Wise yeah I have to agree, $700 range for a single family home. My 4-unit ownership has been a few years but was $1100 fully loaded.

@Douglas Furia - all depends on the asset class however...there are neighborhoods in Toledo have personally proven aren't worth investing in.
[email protected]419-410-3836
LaPlante Real Estate
Website View Page
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Sasi Raj
Fairfax, VA · Member since 2015 · 5 posts · 0 votes
2y
Quote from @Andrew Fidler:

Hi @Sasi Raj I have been busy rolling our property management over to another year, sorry for the delay!
I continue to use ACV coverage on my personal portfolio and have made a couple claims over the past 15 yrs investing in Toledo.
If you use ACV coverage plan on some legwork to establish the value of the claim (and don't make claims for anything small like a puncture in a roof). The adjuster will not do most of the work (and you don't want them to, your numbers will be far more profitable than theirs).
When you have a claim the issue is you have to establish the scope of the repair, THEN deduct the depreciated value of the items. (I don't know their tables by heart, this is just a ball park)
Hallway floor - 5 yrs old, 20 yr lifespan - you get 75% value
Wiring - 45 yrs old, 50 yr lifespan - 10% value
Drywall - 15 yrs old, 50 yr lifespan - 70% value
So you have to walk the job with the adjuster, define the scope of what they agree is part of the claim, then solicit bids to complete the work, then have the whole project reduced based on the lifespan calculation, and finally get a check.
I have been through about six claims in my portfolio and represented owners in about ten times that amount. In general we ensure the base quotes come through high-dollar restoration companies, we get maybe 65% of that amount, and the whole job is funded through a normal contractor with a few reductions in quality (no new hardwood floors, it becomes LVP for example).
As long as you have an experienced project / property manager on your side you will do nicely on claims.
Lastly, I chose ACV coverage for my portfolio because I am not hand-to-mouth broke...if a claim comes back a few grand short it's not a crisis. Personally, the cheaper coverage has proven appropriate in my case...each investor's position will be different of course!

Hi @Andrew Fidler - Thank you very much for the detailed explanation of the ACV coverage and how the claim works. Also thank you for sharing the contact.
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Sasi Raj
Fairfax, VA · Member since 2015 · 5 posts · 0 votes
2y
Quote from @James Wise:

Quote from @Douglas Furia:

I've been running the numbers on various properties in Toledo just to get a feel for different scenarios. When I get insurance quotes in lower income areas around Toledo, rates seem to go through the roof! I'm talking over $4000 premium on a $50,000 asking price property (4-plex)
Is this typical to see for higher risk areas? Would I be better off talking to local insurance agents to get more accurate pricing? (Right now I'm just going to policygenius.com to get ballpark quotes).
Anyone have rules of thumb for what's reasonable to plug in for landlord insurance based on property class, SF, # of units, price?

I quote stuff in Toledo in that price range all the time...Annual policies are typically in the $800 or so range. Your carrier must be trying to sell you some crazy policy.

@James Wise - Thank you for your response. It seems reasonable to know that you quote $800 or so. Are you an agent who can do property insurance? If so, can you please PM me your contact ?

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Alecia LovelessPro Member
Member since 2019 · 3k+ posts · 2k+ votes
2y
@Douglas Furia I’m not in the Midwest but first of all when I switched to an independent insurance company from a national carrier my rates dropped. Secondly everyone’s rates increased substantially this year that I’ve spoken to so although $4,000 may be high even if you look elsewhere you may be surprised that the new rate is higher than it has been. My recently updated 4-unit went from about $1200 last year to $2600 this year.
My insurance agent said that while this “hard cycle” will eventually end and rates will likely drop some at some point in the future and likely that some of the new more stringent regulations might be relaxed some but that they will definitely not drop to the point we were at last year. She said it is being caused due to the increase in natural disasters being caused by climate change and even for people who live in areas not affected by this as much they are being forced to pick up the slack for those that do.
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