Home Owners Insurance Really Necessary?

Question

Wanted to get the the thoughts and opinions of investors out there.  Do you really need home owners insurance for out of state investments that are owned all cash?  I guess the real question is if my deductible is $10,000 the chances of me filing a claim are slim to none and not keeping the policy would save me $341 a month.  These properties are in the North Collingwood area of Cleveland.  Any thoughts on risk vs reward? Gregg

Tom Keith · Answer

Account Closed if you are not concerned with the physical damage coverage and could walk away or rebuild with your own $$. Then you should only be concerned with Liabilty coverage for the properties.

Tom S. · Answer

Account Closed

I would also add many home insurance policies for rentals cover lost rental income while the place is being repaired. So factor that in too.

- Tom

Sean Brooks · Answer

Account Closed

Homeowners insurance for a home owner it's good to have because in the event that something is damaged within the home or on the exterior you insurance can cover the cost of repair. If your property burns to the ground and suffers substantial damage would you be able to pay for the cost of the rebuild?

I'm not an insurance agent but have some knowledge and you'll need to determine what works best for you.

As an investor you need to look at the following:

Liability Insurance

Dwelling vs. Homeowners Insurance

Generally, real estate investors should be covering their investment properties with dwelling policies, and not homeowners policies. The difference: A homeowners policy covers belongings in the home, too. Most investors don’t need that much coverage. A dwelling policy covers the building itself.

Vacancy Considerations

Account Closed · Answer

$10K each incident. May consider only liability.  Thanks!

Account Closed · Answer

5 Duplexes for about $68 a month each.

Jassem A. · Answer

Over 10k per incident is pretty unlikely and would leave you picking up the bill anyway most of the time.  I'd look for a provider that offers a lower deductible if one exists otherwise I'd leave it uninsured.

Of course if you owe anything on the properties then insurance will be required.

Chris K. · Answer

So realistically the deductable is $2k each incident?

Chris K. · Answer

Can you afford to pay out of pocket to rebuild it or to walk away from it if it burns to the ground? If so then it's not necessary but I personally see the value in insurance. When I owned only one rental property the house next door caught fire and did about $50k worth of damage to mine which they took care of. Now I will happily write them a check for $600 a year.

Sounds like your property is worth alot more than mine was so dsay yours had the same $50k damage mine had (mind you the fire didn't touch my house, it was all water, some smoke and firefighters breaking stuff). It would take 12+ years of not having an incident just for you to break even if you self insured. I wouldn't do it.

Richard C. · Answer

What are you insuring with a $10,000 deductible for $341 a month?  Wow.

Or is that for a portfolio of houses?

Home Owners Insurance Really Necessary?

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