I will soon be in the market for a new insurance company for a 4plex. I would like to hear your recommendations. Pros, cons, etc. The property in question has had one claim (theft of copper from condensing units) submitted and denied. Thanks for the input.
Why was the claim denied? Did you not change your policy to a vacant landlord policy with theft coverage? If it wasn't vacant for long (less than 30 days) most landlord policies should cover this (if theft coverage is included).
Foremost (Farmers) landlord policies are great for 1-4 units and they are an excellent insurance company. I've been through claims with multiple insurance companies and they are one of the best (in my opinion). I would work with a good broker to obtain multiple quotes from some of the bigger more well known companies. Go with the best company and price combo. Make sure you understand what's included and what's not. A few tips:
- ACV vs. replacement cost - actual cash value policies vs replacement cost. Understand co-insurance and depreciation when making decisions on this. In my opinion you should always go with a replacement policy on a 1-4 unit building because the cost isn't that much more vs. ACV. Unless you have a large portfolio of 1-4 units and are insuring the entire portfolio I would stay away from ACV.
- Watch for policy exclusions, theft exclusion & vandalism exclusions.
- I go for smaller deductibles because the cost is generally so minimal. I stay within 1-2.5k.
- Always check what the wind & hail deductibles are...many insurance companies have put high deductibles on these because they have been hammered over the last few years. Opt for a policy with no higher than a $2,500 wind and hail deductible.
- Loss of rents...This is extremely important and you should know and understand the limits of coverage. Go for a policy with loss of rents.
- Understand your liability coverage. This is an important factor especially when tenant issues arise.
- Contents coverage...do you need contents coverage? It depends what type of appliances, washer/dryer etc you have in the apartment/house. Do you require tenants to have renters insurance? For low cost rentals it can be hard to require this even if you the lease clearly states it.
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