Rental Property Insurance

13 Replies

I'm trying to analyze a property a day and wonder how you properly estimate some items: monthly insurance specifically. I'm properly overestimating CapEx for now. On the property I'm analyzing, I have a negative cash flow, but Brandon's webinar said you can play around with some of the numbers to see if you can get to what you need. This is the Tallahassee area.

I would contact an independent agent in your area and they should be able to give you a rough ball park. 

In my area of the country, $500/yr will cover most of the properties that are rentals. 50-100k homes. $1000 deductibles. 

I always plan for $50/mo to be safe. 

So many factors go into an insurance rate... so very hard to get exact. But an agent in your area should be able to help get you close enough so you can make an educated offer. 

Hope this helps. 

Originally posted by @Cathey Bayless :

I'm trying to analyze a property a day and wonder how you properly estimate some items: monthly insurance specifically. I'm properly overestimating CapEx for now. On the property I'm analyzing, I have a negative cash flow, but Brandon's webinar said you can play around with some of the numbers to see if you can get to what you need. This is the Tallahassee area.

 Cathey, FL is a very turbulent insurance market.  I would suggest calling a local broker with some of the properties you are looking at.  

Pricing will be dramatically different for a mobil home, to a 1970's home, to a newer concrete home. 

I have 3 properties here in Tally and the rates are as follows. Duplex (both sides under one note, value $100k) NW side of town $768/yr, another duplex (both sides under one note, value $110k) NW side of town but this one has a crawl space $751/yr, One side of a duplex E side of town with crawlspace $823. These all have a $1,000 deductible. 

Some of the main factors are the distance to a fire station, fire hydrant, if they have a crawlspace (higher risk/higher rate) and year the house was built. Like Travis said best bet is to talk to an agent but they will probably stop providing numbers if you are constantly asking for quotes without buying policies. 

Money saving tip is always ask for lowest insured amount they will allow (if you are comfortable with that). For instance on the duplex that is worth $100k, they wanted to insure it for $180k (replacement value). I told them I only wanted to cover the mortgage and my equity, so they eventually brought the coverage down to $125k which was the lowest they would allow. That saved about a $100/yr on the premium. If the house burned down the mortgage would be paid off, I'd have my equity back (to reinvest), and I would own a lot outright that could be sold. 

Mike and Cheron:  Thanks!  Everybody was very helpful.  That tells me what I need to know to guesstimate.  Guess I wasn't that far off, but I did underestimate rather than overestimate.  Good to know.

@Mike Conner I am hunting for rental property insurance, and I have most of my insurance with USAA. They told me that they would only get involved if I decided to replace/rebuild the house. They indicated that if I chose not to rebuild, they would not just cut me a check to pay off my mortgage. I'll check with other providers, but just wanted to see if you knew of one or two that allowed for paying off the loan and moving on.

They also mentioned that some towns/cities will fine owners for lots left vacant. So I'll have to look into that.

@Cathey Bayless

Cathey as an insurance broker in Florida I can tell you that @Jason Bott is completely correct in saying "FL is a very turbulent market." Older homes especially fall prey to high premiums because most surplus lines companies don't want to take them on so Citizen's is the last choice for insurers which can be very costly.

Thank you, Simran.  I will get back to you.  I'm taking a Webinar on having a plan to get a property before the end of the year right now, but they're talking about Pro membership, and I'm already a Pro.

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