Opinions on level of coverage

7 Replies

I am pricing out insurance companies right now and I’m swimming in coverage line items. Besides loss and liability, what other coverage do you recommend (property is in Ohio)?

Also the level of coverage... the first quotes were *really* high, so I started to question how much coverage I needed. For example, some quote full replacement cost, while others cover ARV.

Finally, what are the gothca’s I need to ask about?

Thanks BP! As always, I appreciate you!

Nicole

It depends on a lot of things, typically I estimate about $500 per year in insurance per property, but if your property is in a flood zone or other high hazard zone it may be significantly more.

Hey @Nicole S. What part of Ohio is the property in? I can tell you that up hear in Cleveland prices of quotes can vary dramatically based on several items that are out of a buyers control. Some of those items are zip code rating, age of home, number of units, type of construction (brick or frame). These items all affect the risk ratings that carriers use to calculate the premium. Each carrier also creates their own calculator to come up with these numbers so it will slightly vary from company to company. If the numbers at one company do not work and that agent cant get you other quotes, I suggest moving onto another agent.

If you are buying the property with a loan then you will need a replacement cost policy per the loan requirements. If you purchased it cash then you are free to create a policy that you are comfortable with and works with your budget.

Do you have any specific coverage line items you would like to know more about?

@Nicole S. your level of coverage should be dictated by how much risk you want to take on.  Don't let the agents sell you on what they think you should have.  Tell them how much out of pocket costs you are comfortable with.

Think through this question - If you have a $50,000 fire;

1) Do you want all expenses covered except the deductible?  Then you really need to go with a Replacement Cost policy, insuring the property to a realistic rebuild cost.

2) If you can afford $10,000 out of pocket, as an example, and the savings in premium makes sense to take the this risk on, then you can venture into Actual Cash Value polices, insuring for lower rebuild costs.  But you better have the policy set up correctly to react this way, because if you don't, you could be out of pocket $20k, when you planned for $10k.

@Nicole S. $1M General Liability, no need for Medical Pay. 

Please keep in mind Med pay coverage is where you ask the insurance company to

voluntarily pay for someone's injuries, so the injured party does not need to sue you under the General Liability policy.

I have personally used this coverage on my homeowners policy.  My wife's grandmother fell down at my home, damaged her dentures to the tune of $6,000.  We asked our homeowners policy to pay so that Grandma didn't have to file a lawsuit against her granddaughter.

Most landlord policies do not even offer Med Pay, and just assume the tenant will need to bring suit against the landlord if they want coverage.

Also consider coverage for Business Interruption/Loss of Rental Income. If you have major damage, like a Fire, you will not be earning income while you are rebuilding the property, which will take months. Discuss options and pricing with your broker, but a policy covering 12 months of loss of income, with a 14 to 30 day deductible period is typical.

I would insure based on the type of house it is and your exposure. 

Inner city stuff I would not do replacement on. 

I like high deductibles.

I see Kevin Hoag commented on here, he is a good guy. 

Shoot him a call.