Comparing insurance quotes for new rental property

8 Replies

We are about to close on a rental property in Daly City, CA (just south of San Francisco). $980k, 5-bed / 3-ba, built in 1959. I obtained some insurance quotes and trying to figure out which is the better option. Just want to get your views on these options.


Company A:

Dwelling coverage amount / deductible - $409k / $5,000

Personal property coverage amount / deductible - $20.5k / $5,000

Loss of Rents coverage amount - $40,900

Premises Liability coverage amount - $1,000,000

Landlord Personal Injury coverage amount - $1,000,000

Other items from Company A:

Medical Payments $1k

Other Structures $5k

Total Premium = $100

TOTAL premium = $979


Company B:

Dwelling coverage amount / deductible - $498k / $1,000

Personal property coverage amount / deductible - $22.5k / $1,000

Loss of Rents coverage amount - $99,663

Premises Liability coverage amount - $1,000,000

Landlord Personal Injury coverage amount - $1,000,000

Other items from Company B:

175% dwelling extended replacement cost

Backup of sewers and drains $3,000

Bed bug infestation remediation coverage $2,500

Medical payments to others $5,000

Personal property and theft $2,500

Landlord eviction reimbursement

TOTAL Premium = $1,019

Company A appears to be a “basic form” but for B I think it is “special” because it seems to include some other things (e.g. theft). Also I *think* both are on replacement cost basis, rather than ACV. But let me know if anything suggests otherwise; it isn't very clear from their proposal.

It seems to me that Company B is the better deal, but am I missing anything?

Is there any other important coverage that is missing from these?

Any particular company I should seek a quote from in San Francisco area that is particularly good?

Thanks very much for your advice!

Did you pay $968k for the place? (This question will determine the answer I give)

@Tim Puffer yes, we haven't closed yet but the agreed price is $980k. Thanks for you advice!

Side note from the insurance - Are you renting the rooms out induvidually, or the house as a whole? We could have got a 25 unit for that price here in Michigan that cash flows!

Now the insurance - Assuming that you finances this the mortgage company will not accept you insuring for less than what you purchased it for. Neither option is very good. You want to at least get broad form. Also, you would want to insure for at least 80% of the insurance deemed replacement cost so that you receive the benefit of replacement cost and will not have to have an Actual Cash Value settlement basis. 

Make sense?

It Seems like those figures are low for the amounts of coverages. Which leads me to believe they are ACV or ACV roof structure etc. something doesn't jive there. 

Thanks @Jacob Passmore . I will look into it. Is ACV bad? Should I find one based on replacement cost and potentially pay more for it, or is this ok?

@Tim Puffer , yes sadly in Bay Area the houses do cost a lot more than most other places. But it is the neighborhood we are most comfortable with and go back to visit, so we wanted to stick with something we know.

@Tim Puffer ok I see your point about replacement cost vs ACV. Will try to find one that better suits. Thanks for your advice.

Originally posted by @Tim Puffer :

Now the insurance - Assuming that you finances this the mortgage company will not accept you insuring for less than what you purchased it for. 

 Sure we will. Insurance company simply must not be one of the obnoxious ones that refuses to provide their Cost Estimator Worksheet to the lender, so the lender can ensure that the insurance folks aren't doing fuzzy math to bring down the annual premium and win the customer (comes up less than 5% of the time). 

Chris Mason, Lender in CA (#1220177) and California (#1220177)
415-846-9211

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