I’m currently in the process of buying a duplex in Hubert, North Carolina. I’ll be living in one half and renting out the other. I called USAA thinking I’d get a good deal but turns out I’ll be paying around 2500/year for insurance. For both sides this is the breakdown:
-Home Owners: $450/yr
-Wind and Hail: $2100/yr
-flood: not in a flood zone N/A
So I was curious if this is a normal amount for a duplex or if anyone has has any good experience with a different insurance agency in or out of the military. Just trying to save money but not get screwed with a bad insurance company.
Use an insurance broker let them shop around for you.
I pay around $600 for my insurance on my duplex in NC. Not sure if it has wind or hail coverage though. Judging from your pricing I would assume it does not.
I have a duplex and pay a comparable amount on the insurance, however without wind and hail. Just don’t take that coverage. Or as said above, just shop around. Allstate gives great deals
@Kyle Falkenstein i has a similar situation with the fourplex I’m buying, USAA wanted $2500. Went with NCJUA through Farm Bureau and it was $1200, I’d check them out
Don't pay for replacement cost. Insure it for the amount of the purchase price. If it gets destroyed you pay off the loan and walk away.
@Sam Shueh wow I don’t know why I spaced that..thank you very much! Great idea
@Kyle Falkenstein As much as I love USAA (I'm a long time member), in my experience they are not very competitive when it comes to prices for insuring rental properties. I've had them give me quotes for quite a few of my rentals and they have always been a lot higher. Now, there is a caveat to that...they are amazing when it comes time to paying out an insurance claim, which in itself may be worth the higher premium. I've always used either a local insurance provider, or I've used a broker like others have recommended. I've used a company called Real Protect who provides insurance specifically for investors; they have really good rates, but I will say that I have not had an experience yet of having to file a claim on a property so the verdict is still out (knock on wood).
@Jacob Sampson hmm I’ll have to think about that. Is that legal?
@Stuart Grazier I will take that into consideration cause I don’t need my insurance being SO high with USAA that it’s going to zero out my cash flow but they have always been so helpful in the past with auto claims and help so many military member out when we got hit by Hurricane Florence. Thank you for your input though!
@Patrick Menefee thank you! I’ll definitely check them out! Thank you!
@Kyle Falkenstein I am offended by the question :). I am always legal. You want to ensure for the purchase price and have $2k deductible. I go $5k, but this is your first so $5k may be tough to come up with, at the point that you need to file a claim.
Also, I use Shelter Insurance. They seem to be good for investment property.
@Jacob Sampson didn’t mean to offend lol. Just sounded a little shady to have insurance pay off the mortgage and then just walk away from the destruction and not rebuild.
Yeah USAA was giving me a $2500 deductible which is easier for me do than $5000. I’m still shopping though and will check out what you recommend.
@Kyle Falkenstein Ultimately, you would pay off the debt get your down payment back plus any principle buy down then sell the land. Here is an example of why. I will use my town since I know the numbers here. Your numbers will be different but the principle is the same.
I can buy a duplex here for $55k. It would take $200k to rebuild. If it gets destroyed and I get a check for $200k I'm not going to sink it into rebuilding that single duplex. I'm going to pay off the mortgage, sell the land, and take the remaining $150k+ and purchase 5-10 other investment properties.
@Kyle Falkenstein . Do you have a loan? If so you can’t Insure for actual cash value, it’ll be replacement cost. Check out farmers bureau, that’s who I use in NC.
I may be an anomaly - I have actually found USAA prices for insurance to be pretty darn competitive in the Cumberland County area (for full replacement coverage). They are typically 10 - 15% higher than Foremost, which is peanuts if it ever comes time to make a claim. We don't have wind/hail - it sounds like that's where the real expense is for the OP.
What is wind/hail? In my area everyone just has homeowners insurance. Also last year there was a large hail storm that ruined a lot of vinyl siding, shingles, and vinyl fences. Home owners covered everyone’s damages.
I had a USAA quote that was $1800 a year for a 300k duplex in CO with wind/hail and a $1M liability.
That said I switched my Auto and Primary house from them because they were about 2k more a year than everyone else!
Always call and talk to them and see what they can do or explain why the rate is what it is.
@Kyle Falkenstein it does sound shady and unethical . But it also sounds great for the investor as you pay a lot less in insurance over the time you own the property and your debt is paid if something does happen.
@Jacob Sampson that sounds great if it would work out that way.
@Caleb Heimsoth yes I have a VA loan. I'll check them out though. Do they have wind and hail or do they outsource it?
@Justin Tahilramani yeah it’s because they outsource the wind and hail out to the state or something like that. Which I believe drives the price up.
@Craig Jeppesen it’s because we live in a likely hurricane area. We have a hurricane season here so I’m sure if hurricanes were as random as hail then we may not need it. It’s required in my area though.
Truly curious about the issue of walking away and not rebuilding, since we always insure for replacement cost. If he insures it for the cost of the purchase and the insurance company pays him, are they always expecting him to replace it or are they ever just compensating him for the loss, without the expectation that he'd rebuild?
EDITED: I did some research and found out that if you own the home free and clear, you are possibly allowed to take the money and purchase a different house instead of rebuilding. You have to read the policy.
Updated about 1 month ago
Sources: https://www.insure.com/home-insurance/buying-instead-of-rebuilding-after-disaster.html https://www.insurance-plus.com/blog/do-i-have-to-rebuild-for-my-insurance-to-pay
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