I've been working with B2R and First Key on a large cash out refi and one of their requirements is that I carry a combined liability of $2M for First Key and $3M for B2R. I had my insurance broker get some bids that are coming back at over $2500 a year. This is a real cash flow killer. I currently carry $1M per property and my average cost of insurance on an SFR in AZ is around $350. On 10 properties this additional cost is a real impediment. I'm wondering how others met this requirement and the cost incurred. Would be great to have a referral for a carrier that operates in AZ.
Just to firm up what they are asking for, you need a total of $3M per occurrence, not $5M total, correct?
Either way, some companies charge a minimum per each $1M. Most of the time it ranges from $250 to $500. So $3M might be $1500 for some companies whether you have 1 unit or 100.
$250 per unit is high. For comparison, I just finalized a quote today for 1,006 total units. $3M was $7,000 per year and $5M was $8,500. So it is possible to get that cost per unit down.
@Jason Bott they are asking for an aggregate of $3M. Each property has $1M liability already. I am looking to refi 10 properties. So your saying the cost will be same if I include just these 10 properties or a portfolio of $100? Are you using a separate insurance product on top of the policy in place on each property. I'm having difficulty finding companies that provide such a product and getting limited offers from my broker. Looking for the best way to shop this specific product.
So you need a $2M Excess/Umbrella policy.
I should have clarified, but I assume you have 10 SFR as you referenced them in the post. With 10 total rental units, you should be able to find a $2M umbrella for no more than $1,000.
I am using a separate company.
Another thing to consider, @Serge S. , is that the lender will require a specific rating for the carrier itself. I ran into this...I had the proper amount of insurance but had to cancel my policy and go with a different carrier that had the required rating. Email me and I'll give you a contact.
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