Real Estate Investor · Steamboat, CO · Member since 2010 · 295 posts · 34 votes
HI BP - There is another very similar property nearby that has hazard insurance and cost less than half as much despite being larger, but is 15 years newer. The one I"m trying to get coverage on is a 60 year old brick building. I've tried State Farm who has the other and Farmers and they're over double the cost of the property that is 45 years old.
Who is writing policies that are competitive in the Colorado market? State Farm and Farmers both admitted they "weren't competitive", which was interesting to hear coming from insurers themselves.
Insurance Agent · all 50 states · Member since 2022 · 184 posts · 122 votes
3y
Use Google and find a good Independent Agent they will be able to "shop" multiple carriers and can usually find the most economical rates for the insurance that you want. Bonus points if you use an agent that works mostly or exclusively with real estate investors as that agent is going to have a better understanding of your needs for your insurance.
Property Insurance pricing is cyclical. Meaning that this year company "A" is discounting rates in your area to aquire more business. Next year company "A" is going to increase the pricing for new customers by 20% (estimated guess) and they are going to send renewal increases somewhere in the realm of 2-5% (estimated guess) But also company "B" has decided they are going to start discounting rates in the area. next year it will be company "C", and so on for somewhere around 5-7 years. keep in mind that you are still with company "A" and they have been sending your renewal increases of 2-5% every year which you were happy about because costs go up every year, and 2% is inflation. But now 7 years later company "A" is discounting rates in your area but they aren't lowering the cost of your insurance. You would have to be a new customer to get the new discounted rates.
This is why you should shop your insurance rates routinely, and why having a good independent agent who has access to more insurance carriers is always a good thing to have. State Farm, Farmers, and American National all have great products but they aren't always going to be the "cheapest" you have to do the work to shop around or work with an agent that will do the "shopping around" for you.
Real Estate Investor · Steamboat, CO · Member since 2010 · 295 posts · 34 votes
3y
Clarification- the reference to cost is the quoted cost of annual landlord polices and not the costs to purchase or fix any of the properties. I didn't mean to confuse the matter as insurance is already more than complicated enough!
Insurance Agent · Norwalk, CT · Member since 2016 · 2k+ posts · 1k+ votes
3y
Burt,
There are several factors that could be lowering the pricing on the other property relative to the one you are looking at:
1. rebuilding cost: If the other dwelling is a Wood Frame construction, the might be substantially less to rebuild than the brick. That would lead to a different Building limit (Replacement Cost). The frame building might have a limit of $200,000 and the Brick building could be higher. If one building has more square footage, the Replacement cost could be higher on the larger.
2. Fire Protection: if the other building is in an area with hydrants and the Brick is in a non-hydrant area the fire rates could be higher in the Non-Hydrant area
3. Perils insured: If you are getting quotes with "Special Form" and the other property is at "Named Perils" your rate would be higher (but I would not go for the lower coverage)
4. Deductibles/Coverage: Higher deductibles could lower a policy. Higher limits for Liability could raise the cost (but I recommend you buy the most coverage)
Remember, you contacted two Captive agents (they normally just write with the one company). I would suggest that you seek out an independent agent(s) that represent multiple companies.
Real Estate Agent · New Castle, CO · Member since 2014 · 84 posts · 36 votes
3y
@Burt L. I was speaking with an insurance rep about a property that I was interested in about two months ago. He told me that rates all over the region are going up due to increased risk of wildfire (I'm in New Castle). Maybe the comparable property you're talking about hasn't traded recently and no one has updated their policy? But as John said, try a smaller firm with independent agents.
Insurance Agent · all 50 states · Member since 2022 · 184 posts · 122 votes
3y
Use Google and find a good Independent Agent they will be able to "shop" multiple carriers and can usually find the most economical rates for the insurance that you want. Bonus points if you use an agent that works mostly or exclusively with real estate investors as that agent is going to have a better understanding of your needs for your insurance.
Property Insurance pricing is cyclical. Meaning that this year company "A" is discounting rates in your area to aquire more business. Next year company "A" is going to increase the pricing for new customers by 20% (estimated guess) and they are going to send renewal increases somewhere in the realm of 2-5% (estimated guess) But also company "B" has decided they are going to start discounting rates in the area. next year it will be company "C", and so on for somewhere around 5-7 years. keep in mind that you are still with company "A" and they have been sending your renewal increases of 2-5% every year which you were happy about because costs go up every year, and 2% is inflation. But now 7 years later company "A" is discounting rates in your area but they aren't lowering the cost of your insurance. You would have to be a new customer to get the new discounted rates.
This is why you should shop your insurance rates routinely, and why having a good independent agent who has access to more insurance carriers is always a good thing to have. State Farm, Farmers, and American National all have great products but they aren't always going to be the "cheapest" you have to do the work to shop around or work with an agent that will do the "shopping around" for you.
Real Estate Investor · Steamboat, CO · Member since 2010 · 295 posts · 34 votes
3y
I much appreciate the replies- insurance is an area most people don't really know what their coverage will actually be until its too late.
Its certainly insightful to learn that the carriers move aggressively into certain areas each year or so and the pricing is always moving. I received some independent agent referrals and am looking into those. Otherwise it would be hard to navigate as there are so many independent agents and its hard to navigate through other than lobbing darts at all their business listings.
Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
3y
@Burt L. ask a few local landlords if you don't feel like you are finding an independent agent who specializes in the REI space.
You want to find an agent who has access to enough carriers to carry you through the market cycles like @Aaron Porter references above. If you don't, then you stuck shopping your policy to other agents every 1-2 years, which can be a time suck.