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What to Cover (rental)?

Posted Jan 18 2024, 04:32

What all do I need to cover on insurance on my landlord policy? 

I have a policy but I feel like it’s too much?

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Tony Wilcox
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Tony Wilcox
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Replied Jan 18 2024, 05:24

It all depends what you want to cover. I would say the biggest things to look at would be do you want replacement cost (amount needed to replace/fix at todays cost) or actual cash value (depreciated amount depending on age of roof, or item damaged). Of course replacement cost will cost more with it providing more and better coverage. Next would be to look at the liability amount to make sure it is enough to cover you if you are liable for something. Next I would look at water backup coverage, especially if there is a basement. That is a good place to start. This also would be a great question to go over with your current agent!

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Owen Rosen
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Owen Rosen
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Replied Jan 18 2024, 06:39

Don't forget about loss of income/rent...that being said this is a very broad question and I'm not certain if you think you have too much coverage or it costs too much or both...

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Jill F.
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Jill F.
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Replied Jan 18 2024, 06:44

We pay 30-50 per door depending on the property

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John Mocker#1 Insurance Contributor
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John Mocker#1 Insurance Contributor
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Replied Jan 19 2024, 06:56

Jessica,

Without knowing the details of the property and answers telling you what to cover will be generalizations.  If your property has any special aspects, you may find that the recommendations are not addressing it or indicating you should remove a needed coverager.

If this is a 1-4 family rental dwelling (completely non-owner occupied) the likely policy is a Dwelling Fire Policy.  That policy can cover:

Building  (Replacement Cost is the better coverage.  Actual cash value is not as good)

Contents

Loss of Rents  (a percent of the bldg coverage is normally included.  Raise that limit if needed)

Other structures  (for detached garages, sheds, etc...)

Liability   (Maximize this coverage.  The cost to go up in limit is normally cheap)

Medical payments  (for small cost injuries that happen on site.  Keeps it from becoming a lawsuit)

Optional coverages your company may offer:

Water Backup

utility lines

equipment breakdown

Personal Injury

Cyber

Other policies you may need

Umbrella policy

Workers Compensation

You should contact a couple of Independent Agents and discuss your property.  See what they recommend.  Then decide on what coverage you want and at what limits/deductible.  Once you have that get quotes.  In addition to price you should condsider the quality of the company (AM Best rates, Insurance dept complaints, reviews,....) and the quality of the agent (do they know this type of business, how many companies do the represent, etc..)

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Bob Stevens
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Bob Stevens
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Replied Feb 22 2024, 05:23
Quote from @Jessica Hollingsworth:

What all do I need to cover on insurance on my landlord policy? 

I have a policy but I feel like it’s too much?


 the cost of your investment that's it, of course basic liability You ins should not be more then 1k 

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Owen Rosen
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Owen Rosen
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Replied Feb 23 2024, 11:08
Quote from @Bob Stevens:
Quote from @Jessica Hollingsworth:

What all do I need to cover on insurance on my landlord policy? 

I have a policy but I feel like it’s too much?


 the cost of your investment that's it, of course basic liability You ins should not be more then 1k 


 Huh?  Only insured what you paid?  Insurance should not cost more than $1000?  For what?  For every property in every market?  I don't think so.

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Bob Stevens
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Bob Stevens
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Replied Feb 23 2024, 11:46
Quote from @Owen Rosen:
Quote from @Bob Stevens:
Quote from @Jessica Hollingsworth:

What all do I need to cover on insurance on my landlord policy? 

I have a policy but I feel like it’s too much?


 the cost of your investment that's it, of course basic liability You ins should not be more then 1k 


 Huh?  Only insured what you paid?  Insurance should not cost more than $1000?  For what?  For every property in every market?  I don't think so.


 YES only your investment, your not going to rebuild if total loss.  Sorry for some reason I assumed you would be the 100k all in price, if so yes INS is 1kish, 

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Owen Rosen
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Owen Rosen
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Replied Feb 23 2024, 12:37
Quote from @Bob Stevens:
Quote from @Owen Rosen:
Quote from @Bob Stevens:
Quote from @Jessica Hollingsworth:

What all do I need to cover on insurance on my landlord policy? 

I have a policy but I feel like it’s too much?


 the cost of your investment that's it, of course basic liability You ins should not be more then 1k 


 Huh?  Only insured what you paid?  Insurance should not cost more than $1000?  For what?  For every property in every market?  I don't think so.


 YES only your investment, your not going to rebuild if total loss.  Sorry for some reason I assumed you would be the 100k all in price, if so yes INS is 1kish, 

What if your tenant has a kitchen fire and you need to rebuild/remediate? With actual cash value you'll get a depreciated claim payout and much of the expense might not be covered. Or are you just going to tear it down and move on?

Total losses are rare. My scenario isn't. I don't think your advice is suitable for many investors but everything is case by case and your one size fits all advice could lead to a lot of issues.


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Bob Stevens
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Bob Stevens
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Replied Feb 23 2024, 12:43
Quote from @Owen Rosen:
Quote from @Bob Stevens:
Quote from @Owen Rosen:
Quote from @Bob Stevens:
Quote from @Jessica Hollingsworth:

What all do I need to cover on insurance on my landlord policy? 

I have a policy but I feel like it’s too much?


 the cost of your investment that's it, of course basic liability You ins should not be more then 1k 


 Huh?  Only insured what you paid?  Insurance should not cost more than $1000?  For what?  For every property in every market?  I don't think so.


 YES only your investment, your not going to rebuild if total loss.  Sorry for some reason I assumed you would be the 100k all in price, if so yes INS is 1kish, 

What if your tenant has a kitchen fire and you need to rebuild/remediate? With actual cash value you'll get a depreciated claim payout and much of the expense might not be covered. Or are you just going to tear it down and move on?

Total losses are rare. My scenario isn't. I don't think your advice is suitable for many investors but everything is case by case and your one size fits all advice could lead to a lot of issues.


In 10 years doing about 500 deals in the Cleveland markets, we never had one claim. Also we only get ins for the total all in on the props, 75- 100k, its about 850 a year. If there is a fire in the kitchen sure insurance will cover. If its a total lose, get our money back and move on. Not going to rebuild. 
ALL THE BEST 

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Owen Rosen
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Replied Feb 23 2024, 12:58
Quote from @Bob Stevens:
Quote from @Owen Rosen:
Quote from @Bob Stevens:
Quote from @Owen Rosen:
Quote from @Bob Stevens:
Quote from @Jessica Hollingsworth:

What all do I need to cover on insurance on my landlord policy? 

I have a policy but I feel like it’s too much?


 the cost of your investment that's it, of course basic liability You ins should not be more then 1k 


 Huh?  Only insured what you paid?  Insurance should not cost more than $1000?  For what?  For every property in every market?  I don't think so.


 YES only your investment, your not going to rebuild if total loss.  Sorry for some reason I assumed you would be the 100k all in price, if so yes INS is 1kish, 

What if your tenant has a kitchen fire and you need to rebuild/remediate? With actual cash value you'll get a depreciated claim payout and much of the expense might not be covered. Or are you just going to tear it down and move on?

Total losses are rare. My scenario isn't. I don't think your advice is suitable for many investors but everything is case by case and your one size fits all advice could lead to a lot of issues.


In 10 years doing about 500 deals in the Cleveland markets, we never had one claim. Also we only get ins for the total all in on the props, 75- 100k, its about 850 a year. If there is a fire in the kitchen sure insurance will cover. If its a total lose, get our money back and move on. Not going to rebuild. 
ALL THE BEST 
If you aren't insuring replacement cost, insurance probably won't cover it as you say.
Most properties are not 75-100k. Yours might be but that's uncommon overall.
If you've never had a claim that's great but it's not really relevant to the discussion.
Do you understand how partial losses work and what loss settlement provisions you have on your policies? 
These are rhetorical questions but newer investors should speak with a trustworthy agent that has your back when making these decisions.




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James Wise#4 All Forums Contributor
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James Wise#4 All Forums Contributor
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Replied Feb 25 2024, 06:14
Quote from @Jessica Hollingsworth:

What all do I need to cover on insurance on my landlord policy? 

I have a policy but I feel like it’s too much?


 You should only consider making a claim if it's a total loss. Trying to make claims on small stuff will get you dropped from your current carrier and keep other carriers from insuring you. 

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Owen Rosen
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Owen Rosen
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Replied Feb 26 2024, 06:06
Quote from @James Wise:
Quote from @Jessica Hollingsworth:

What all do I need to cover on insurance on my landlord policy? 

I have a policy but I feel like it’s too much?


 You should only consider making a claim if it's a total loss. Trying to make claims on small stuff will get you dropped from your current carrier and keep other carriers from insuring you. 


 This really doesn't make any sense.  Let's say you insure a property for $350,000 replacement cost.  If there's a kitchen fire that requires $150,000 to rebuild and remediate you're suggesting not filing a claim because it's not a total loss?  

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James Wise#4 All Forums Contributor
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James Wise#4 All Forums Contributor
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Replied Feb 26 2024, 06:31
Quote from @Owen Rosen:
Quote from @James Wise:
Quote from @Jessica Hollingsworth:

What all do I need to cover on insurance on my landlord policy? 

I have a policy but I feel like it’s too much?


 You should only consider making a claim if it's a total loss. Trying to make claims on small stuff will get you dropped from your current carrier and keep other carriers from insuring you. 


 This really doesn't make any sense.  Let's say you insure a property for $350,000 replacement cost.  If there's a kitchen fire that requires $150,000 to rebuild and remediate you're suggesting not filing a claim because it's not a total loss?  


 If you read what I said, I said "trying to make claims on small stuff" I don't think anyone would consider a $150,000 fire a small item. 

In other words, if ya'll are thinking you can buy cheapo rental properties in places like Jackson, Mississippi which aren't gonna have no $150k kitchens you can't be filing claims for loss of rents, basement water back ups, equipment breakdowns and ticky tac crap like that, you're gonna get dropped by your carrier and the next carrier is going to deny you coverage.