I'm in the process of converting a vacation home I own into a rental property as well as trying to pick up another SFR home as a rental in the near future. Right now, the vacation home is insured through a brand name national carrier for around $600/year with $1M liability and $1,000 deductible. When talking to the insurance agent this week, I was quoted $1,000/year to go to a commercial policy with similar coverage limits. Does that seem appropriate? Both policies are for replacement value on a 1,800SF home in WI.
I didn't expect to see such a big jump in premiums. I understand that having a tenant in the building is a higher risk than owner occupied, but somehow I thought that would be offset in that there is no personal property to cover anymore.
My next step is to find a good independent broker to look at my entire insurance portfolio. Is there anything else I should be considering at the moment? This is my first venture into the world of holding rental property. Thanks for the help!
Yep, landlord insurance is quite a bit more expensive than homeowners.
Jon Holdman, Flying Phoenix LLC
There is more to look at but your cost doesn't sound too far off. Get a copy of the policy and see what the ISO form is. ISO is the standards body and the forms usually have a prefix of HO or FN.
You need to know this because there are a few ways to insure your house and cover your liability. Landlord Endorsement on an HO policy or FN policy are more appropriate at this point for you. AND, your $1M liability should be reduced to $300k plus you need a $1M Liability Policy or Umbrella.
I'd be surprised if you need a 'commercial policy'. Did you buy the homes in your business name? If so, you do need a commercial policy. The name brand writers aren't necessarily the best commercial insurers. Network with others to see who they use in your area.
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