Homeowners insurance for 2 buildings on 1 parcel. Two policies?

Question

Do I need two separate insurance policies?

I have a 3 unit multi-family rental in Michigan. 2 units are in a duplex, and the other unit is separate (it looks like

a single family home next door, but is actually on the same parcel of land). I bought the property for $110,000

and am trying to get my insurance straightened out. The duplex has a separate mailing address than the other

unit, but they are both on 1 parcel of land, under 1 mortgage, and the two buildings are not

taxed separately. The insurance company seemed a little confused on the situation, and ended up

saying I need two separate quotes because they have 2 different mailing addresses.

I do not want to have to pay two separate policies. I guess another option would be to separate the lot

into two parcels and sell off one of them as long as the lots would meet all of the zoning

requirements. Thoughts?

I do have flood insurance, but looking at the documents, it only has 1 of the addresses listed. I am nervous that if

anything were to happen to the address not listed, I would not be covered.

John Mocker · Answer

Joseph,

I have a couple similar situations.  The one like yours, is two single family houses on the same deed.  In that case we wrote a homeowners one the one the insured occupied and a dwelling fire policy for the rented one.  Since they are both with the same company, they wrote the dwelling fire without Liability (covered under the homeowners).   Since both are rentals you may be able to get a company to write both on the same Dwelling Fire Policy if they allow it or two separate dwelling Fire Policies with only one having the Liability.

The situation that would worry me if I was your agent would be if the two houses were insured with different companies each with Liability.  The worry would not be because of coverage but rather who would pay.

Jason Bott · Answer

@Joseph Weiss here's 1 more insurance agents opinion.

This is very common situation in pre 1920 properties throughout the Midwest.

1 policy is the way to go. 10+ insurance companies in MI that will do this.

Imagine you have a tenant walking from building 1 to building 2, then slips and falls, and files a liability claim.

Policy 1 says he was closer to building 2, and Policy #2 says they were closer to building #1.

Now chances are you will have the same insurance company on both, but if you don't, because you found a cheaper policy for the single family, you have just created a big problem where both companies are denying the claim.

Casey J Burkhead · Answer

As long as they are on the same deed, you should be able to get one policy with some tweaks in coverage.  If you aren't already, I'd check with an independent agent who has access to multiple companies.

Joseph Weiss · Answer

The two buildings are on the same deed. One of them is a 902 address, the other is 906. 906 does not appear in any document (closing disclosure, mortgage docs, nothing).

Darcy Tucker · Answer

Have a comment and a question regarding our similar situation.   My husband and I purchased a piece of property in NE Missouri with a home, barn and pole barn that we converted to our home, most people call them bardominiums.  Once we moved into the bardominium (our daughter and her family moved into the home) we were told we should request separate house no for our home for emergency / 911 purposes.   So could be that 906 was created for the same reason?    My question I'm putting out there is this:  When we purchased the home we obtained 1 ins pol for all.  I told the agent up front our plans to convert and our daughter / her family would live in the older home.  Once our home was 90% complete we contacted our agent to update the policy.  We were told we would have to have a second policy and it would have to be a renter's policy which was double the cost of the initial policy and that was just for the structure.   We/I don't want to separate the property making it autonomous since it will all go to her in the long run. They pay their portion of expenses.   I have talked to the assessor, insurance companies who think they can do it as one but won't know for sure until it's submitted to the underwriter??   I have talked to a R/E attorney that didn't want to be involved "in something like that"!  Like what??? I am not nor have I hid our intentions from the start.  We are one family two households on one property.  How do we make this concise and cost effective?  Any thoughts out there?

Daniel Francoeur · Answer

@Joseph Weiss Hey, any updates on what you went with?We have a similar situation here where we have two properties on a single lot.We are getting a lot of different info from different insurance agents on whether we need 1 or 2 policies.Obviously, we don't want to pay for two policies.We are buying in Pawtucket, RI.Appreciate and comments/feedback.

Geovanni Heredia · Answer

Hey @Daniel Francoeur, I'm a local investor and not an insurance agent but I am in touch with a couple in the area that I can recommend, Lapointe Insurance or Soucy Insurance they'll help answer your questions and all that good stuff even if you don't buy from them. If you call Lapointe ask for John he's the VP they're a local company and know their stuff!

Kevin Hoag · Answer

Hey @Joseph Weiss I run into this situation regularly here in Cleveland. Most insurance companies will make you insure each property separately. This is because you need replacement cost on each property. If one catches fire the chances of loosing both are high if wind blows it will ruin both roofs, ect. I have scene policies that greatly increase the separate structure coverage percentage when the duplex is covered for 300k+ and the single family home is only 7-800sqr ft. It is hard to find a carrier that will cover both homes and not require two policies.

best of luck please let us know how it goes.

Ricardo Alonso · Answer

@Joseph Weiss

Hey Joseph,

A good rule of thumb is if it's under the same roof you can usually keep it under one policy *for homeowners.* That being said since the single family home is a complete other structure, away from the duplex you would need 2 separate homeowners policy. Now if these 3 units are under 1 company than you can most likely get a property policy that includes both of the homes under 1 policy. Hope this helps.

Thanks,

Ricardo A.

Homeowners insurance for 2 buildings on 1 parcel. Two policies?

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