Had my HVAC stolen but I have insurance. Advice needed.

26 Replies

So I closed on my first rehab 3 days ago. YAY! But now someone has stolen my AC unit haha. We have insurance and our deductible is $1k. I heard Acs can cost $3k-$5k? is that accurate? I'm in Atlanta, GA.

Also, my partner is saying maybe we shouldn't make a claim because too many claims will make it harder to get a payout? That's what it sounded like. But also an insurance agent told me the insurances are temporary and don't carry on to new projects. Can someone shed some light for me? Yes, this sucks but we have a $10k fluff margin in our budget so we expected things. I'm just excited to be able to learn from this experience.

Did the theft occur before or after closing?

If the unit was old, I'd probably just pay for the replacement myself. If it was newer, file a claim, that's the point of insurance. If it was a later system and just needs an outside unit, that may be less expensive but if it's an r22 older unit, they'll probably want to change out the whole system and that typically runs 4 to 5 thousand.

Haven't heard about too many ac units being stolen in recent years since they made it harder to market them at the scrap yards.

It happened after closing. And it was older, the house was built in 1950 but idk when the newest one was out in. I’ll ask my partner. Thanks for your help! I’ll reply with what we decide. If it’s over $3k we might file a claim 

Originally posted by @John Teachout :

Did the theft occur before or after closing?

If the unit was old, I'd probably just pay for the replacement myself. If it was newer, file a claim, that's the point of insurance. If it was a later system and just needs an outside unit, that may be less expensive but if it's an r22 older unit, they'll probably want to change out the whole system and that typically runs 4 to 5 thousand.

Haven't heard about too many ac units being stolen in recent years since they made it harder to market them at the scrap yards.

 

I agree with @John Teachout also depending on the size of the house you can do a smaller AC unit.  I usually spend 1.5k to 1.9k for the compressor (which is what I assume was actually stolen).  I assume the A coil was probably not stolen as it is attached to the furnace.  

@Jordan Dooley wow same thing happened to mine after closing as well! Closed on a SFH in Kansas City and a week later bam. PM emails me saying it got stolen, they noticed it gone during a walk through with prospective renters 😂.

I did not file a claim since the price will be under 1k for replacement . Interesting how this is a thing with people stealing these.

Yea my partner was saying it’d be around $1600 so maybe I’m thinking of the wrong part of it wasn’t the whole AC! Thanks 

Originally posted by @Jacob Sampson :

I agree with @John Teachout also depending on the size of the house you can do a smaller AC unit.  I usually spend 1.5k to 1.9k for the compressor (which is what I assume was actually stolen).  I assume the A coil was probably not stolen as it is attached to the furnace.  

 

Yes this is crazy haha! Congrats on the closing! 

Originally posted by @Luis Vaca :

@Jordan Dooley wow same thing happened to mine after closing as well! Closed on a SFH in Kansas City and a week later bam. PM emails me saying it got stolen, they noticed it gone during a walk through with prospective renters 😂.

I did not file a claim since the price will be under 1k for replacement . Interesting how this is a thing with people stealing these.

 

@Jordan Dooley

Your excitement may turn into more financial pain.
. Rehab properties that a targeted are usually hit again and again during rehab. (copper pipe/electrical/appliances/doors/windows) So expext and plan for more.
. You can buy reconditioned ac units
. You need to call your agent and review your policy.
. Consider DWALT SITElock

Was this a heat pump or a gas furnace with straight AC? Heat pumps are more expensive if it's just the outside unit that needs replacement.

I've had to replace the HVAC systems in more than half of our properties within the first year or two of ownership. From now on, we'll just budget for that in our offers if the units are older. 

@Michael Noto

Ya...its nutz...and it affects even A and B class properties...

In the new subdivisions they are building, the builders hire security guards to drive around and patrol the new homes under construction to protect from theft...appliances, cabinets, water heaters, AC's, light fixtures....they steal it all....

Originally posted by @Luis Vaca :

@Jordan Dooley wow same thing happened to mine after closing as well! Closed on a SFH in Kansas City and a week later bam. PM emails me saying it got stolen, they noticed it gone during a walk through with prospective renters 😂.

I did not file a claim since the price will be under 1k for replacement . Interesting how this is a thing with people stealing these. 

YUP its a non contact sport out in C class rental areas and some B class .. one thing to tip U off when your looking at rentals drive up and down the streets and take note to how many condensers have cages around them.. then you will know that if you don't cage yours good chance its stolen and will get stolen many times over the years..  is such a bad problem that there are LOJACKS just for condenser units.. 

when its bad is when they cut the little 1 foot of copper out of the system and now you have to replace the entire system.. 

If I was going back into this type of landlording business I would try to retro fit as many of the condensers to the Roof as possible. 

 

@Jordan Dooley couple things:

First - make sure you have the proper type of policy for the risk such as a vacant, builders risk or course of construction policy.

If you have a “landlord “ policy chances are they will deny any claim bc the property should have been on a different policy contract.

Second - read the exclusions on your policy.

Many policies for vacant property exclude theft with the exception that some (builders risk and COC) may cover theft of "building materials" - since the AC was already installed it would be a stretch to call it building materials.

Last - I bet you have ACV coverage for this type of loss which means they will depreciate for the age of the AC before paying out on a claim.

If the cost of the unit is $3000 and it’s 5 to 7+ years old it would be adjusted heavily for age - maybe 50%?

$3000 repair - 50% depreciation = $1500 payout.

$1500 pay out minus your deductible = probably not worth claiming it.

Also - someone mentioned above...your place has a target on it and thieves will be back so you need to extra secure the property and make friends with the neighbors so they hopefully watch out for you.

Good luck!

@Jordan Dooley

This seems like dejavu. My very first rental property I had the same thing happen. My property manager had just rented the home out. New tenant pulled up in yard and a truck flew out from behind the house with unit on theback. He literally chased them down the road. Lol. But they got away.

Definately aggravating. Just paid cash for new unit. About 1800 for me.

Originally posted by @Michael Norris :

@Jordan Dooley couple things:

First - make sure you have the proper type of policy for the risk such as a vacant, builders risk or course of construction policy.

If you have a “landlord “ policy chances are they will deny any claim bc the property should have been on a different policy contract.

Second - read the exclusions on your policy.

Many policies for vacant property exclude theft with the exception that some (builders risk and COC) may cover theft of "building materials" - since the AC was already installed it would be a stretch to call it building materials.

Last - I bet you have ACV coverage for this type of loss which means they will depreciate for the age of the AC before paying out on a claim.

If the cost of the unit is $3000 and it’s 5 to 7+ years old it would be adjusted heavily for age - maybe 50%?

$3000 repair - 50% depreciation = $1500 payout.

$1500 pay out minus your deductible = probably not worth claiming it.

Also - someone mentioned above...your place has a target on it and thieves will be back so you need to extra secure the property and make friends with the neighbors so they hopefully watch out for you.

Good luck!

Yup I was just about to post about ACV vs RC - that nice low ACV premium isn't so cheap when you actually have to use the policy and file a claim. Same thing w/ these 1% of building value deductibles w/o riders that lower the deductible for specific losses (like wind/hail).

Can you elaborate a little please?

Originally posted by @Matthew Olszak :
Originally posted by @Michael Norris:

@Jordan Dooley couple things:

First - make sure you have the proper type of policy for the risk such as a vacant, builders risk or course of construction policy.

If you have a “landlord “ policy chances are they will deny any claim bc the property should have been on a different policy contract.

Second - read the exclusions on your policy.

Many policies for vacant property exclude theft with the exception that some (builders risk and COC) may cover theft of "building materials" - since the AC was already installed it would be a stretch to call it building materials.

Last - I bet you have ACV coverage for this type of loss which means they will depreciate for the age of the AC before paying out on a claim.

If the cost of the unit is $3000 and it’s 5 to 7+ years old it would be adjusted heavily for age - maybe 50%?

$3000 repair - 50% depreciation = $1500 payout.

$1500 pay out minus your deductible = probably not worth claiming it.

Also - someone mentioned above...your place has a target on it and thieves will be back so you need to extra secure the property and make friends with the neighbors so they hopefully watch out for you.

Good luck!

Yup I was just about to post about ACV vs RC - that nice low ACV premium gets isn't so cheap when you actually have to use the policy and file a claim. Same thing w/ these 1% of building value deductibles w/o riders that lower the deductible for specific losses (like wind/hail).

 

Originally posted by @Jordan Dooley :
Can you elaborate a little please?

Originally posted by @Matthew Olszak:
Originally posted by @Michael Norris:

@Jordan Dooley couple things:

First - make sure you have the proper type of policy for the risk such as a vacant, builders risk or course of construction policy.

If you have a “landlord “ policy chances are they will deny any claim bc the property should have been on a different policy contract.

Second - read the exclusions on your policy.

Many policies for vacant property exclude theft with the exception that some (builders risk and COC) may cover theft of "building materials" - since the AC was already installed it would be a stretch to call it building materials.

Last - I bet you have ACV coverage for this type of loss which means they will depreciate for the age of the AC before paying out on a claim.

If the cost of the unit is $3000 and it’s 5 to 7+ years old it would be adjusted heavily for age - maybe 50%?

$3000 repair - 50% depreciation = $1500 payout.

$1500 pay out minus your deductible = probably not worth claiming it.

Also - someone mentioned above...your place has a target on it and thieves will be back so you need to extra secure the property and make friends with the neighbors so they hopefully watch out for you.

Good luck!

Yup I was just about to post about ACV vs RC - that nice low ACV premium gets isn't so cheap when you actually have to use the policy and file a claim. Same thing w/ these 1% of building value deductibles w/o riders that lower the deductible for specific losses (like wind/hail).

 

First you need to look for your vacancy clause. IE your policy may state that the property cannot be vacant for more than 30 days or coverage won't apply. Or on the flip side, a builder's policy might only apply if the building is vacant and under construction. Assuming that coverage will apply, check to see if there are any special provisions or riders that deal with theft and read through those exclusions (there should be). Sometimes there will be a separate deductible for those items or different terms/coverage. It should also define what is covered under the theft coverage.

If this is a covered loss with no separate terms, you'll then need to check to if your policy is Actual Cash Value or Replacement Cost. ACV takes the replacement cost and subtracts depreciation. IE If your AC has a usable life of say 10 years, and they determine it was 5 years old, you'll only get 5/10ths (50%) of the value of their determined cost of replacement. If you chose not to replace it and just keep the cash after you get paid, your insurance won't cover any future claims related to that. With replacement cost coverage, they'll give you a check for the ACV, then once you replace it, give you a check for the depreciated value as well. As such, policies that pay ACV are cheaper because the insurance company expects to pay much less for their risk as they only have to pay the depreciated value of the loss.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here