Can't Find Insurance for Condo as a Rental Held in LLC

9 Replies

I'm not sure if has as much to do with the fact that I purchased in my LLC, but the insurance policy I had on the property gave me a cancellation notice because they did an inspection and determined the firewall did not extend through the roof of the building. Now I am having a good bit of trouble finding a policy for this unit. The one I did find was ridiculously priced.

This unit is parceled as a townhouse, but it acts more like a condo. The HOA insurance covers the exterior of the structure excluding the roof. My agent is now trying to find a commercial policy to fit the situation. It is currently vacant while I am renovating it and I am still trying to decide if I will attempt to resell it first or hold it as a rental. This insurance may be the deciding factor. Does anyone know why condos as rentals are so hard to insure and do you know any companies I should contact that you know write this type of policy?

Thanks, 

Brandon

Take action and I'll see you at the top!

I'm in Colorado and my LLC-owned condos are insured through Farmer's Insurance.

Good luck!

It is expensive because the loss ratios on rental condos are very high. Carriers have lost big money so they pulled out.

Let's be clear, it's Not a condo, from what you said, so you might stop referring to it as one, and it's obviously not a "condo insurance" issue, it's a fee simple townhouse.  Do you have any idea if it's feasible, or how much it costs, to add the firewall in the attic.  It's usually just a certain thickness of Sheetrock.

Fixing your firewall shouldn't be a huge cost. It is just extending the dividing wall all the way to the roof. This is because most apartment/condo fires spread through the attic. Check your local building codes or call your fire department and they will be able to tell you their requirements. It is probably just 3/8 gyp board, but it could be longer. This might fix your insurance issues all together. 

@Wayne Brooks @Lucas Miller

Thanks for the advice guys, but the writer of the policy actually state it was because "the firewall did not extend THROUGH the roof."  That is not an expense I want to take on nor do I think the building would allow.  There are several other rentals in the development and I have reached out to the owners to find out which insurers they are using.

@Linda Weygant

Thanks for the tip.  Farmer's was actually one of my first calls before I created this post and they do not insure this type of property in my state and neither does their partner Foremost they offered to connect me with.

Thanks for the advice guys, but the writer of the policy actually state it was because "the firewall did not extend THROUGH the roof."  That is not an expense I want to take on nor do I think the building would allow.  There are several other rentals in the development and I have reached out to the owners to find out which insurers they are using.

This makes no sense, since walls don't extend through roofs. I think you may just have been talking with someone with a poor grasp of prepositions.

Here's a quick bit on townhouse firewalls: http://www.inman.com/2013/01/29/is-your-townhomes-firewall-code/

I'm no expert, but I don't think this would be an expensive or complicated thing to address. 

Brandon Johnson If Foremost won't take it you will likely need to go to the Excess and Surplus lines market; which has companies that will insure high risk. Your agent should know how to access these companies.

@Tim Puffer

Thanks to all who offered advice here.  My existing insurance agent found me a solution in moving all of my personal policies into one commercial policy since I am now up to 8 units as of last Friday when I purchased a 4-plex.  This way I will be able to add and remove properties easily and at much lower rates.  Been wanting this approach and they decided since it doesn't look like I plan to slow down anytime soon that this was the right opportunity to change strategy.

Thanks,

Take action and I'll see you at the top!

Brandon

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