Insurance on a 6 plex - 5K?

Question

Hi

I own several multi family buildings in Central / North Florida and for example on an older duplex I pay $700 a year for insurance, which I feel is a good deal.  I am under contract for a 6 plex (built in the 1920's) in a different city but in the middle of the state as well and I am getting quoted for 5K a year for insurnace.

Is this what everyone is experiencing and any alternative ways to get some relief from that premium?  I'm a higher risk kinda guy, would really just want to make sure the loan would be paid off.  My other properties generate enough I don't need to worry about loss of income.   Not sure how much these items impact the premiums.  We tried changing the deductible levels but it didn't do much to the premium.

Thanks for any suggestions.

Gabriel Mendez · Answer

You can get a Dwelling fire policy for up to 4 units. 5+ you are now needing a commercial policy. Without getting too many more details that is probably one of the reasons why. Also like a posted above mentioned, liability limits. Commercial will usually have higher limits. Not saying you couldn't get 1 million on a personal but commercial it typically is standard to have them higher.

Glenn P. · Answer

@Peter Sautter Thank you for that insight.  @Jared Townsend Thanks again!

Jared Townsend · Answer

Generally speaking, building insurance rates are based on the perceived risk of damage and cost to repair the building. Proving to the carrier that the building is a lower risk through methods like the wind mitigation report is your best bet to get a lower price without sacrificing coverage.

You mentioned the roof is not in great condition right now. I am speculating but if the rest of the home is in similar condition then your agent may have only quoted the property with carriers that have looser underwriting requirements but are more expensive. As you rehab the home and show that the building is in good shape you may find that they provide quotes with different carriers that are more competitive.

It all comes down to having a relationship with a good insurance agent that can help educate you on these things with specific regard to this property. If you have any other specific questions related to this property feel free to message me and I will help any way that I can!

Glenn P. · Answer

@Jared Townsend  Thanks for your reply.  Yes I noticed that about the liability limits.  It just seems overall with my properties this 6 plex is way more price per unit, and wondering what alternatives there are.  I'll look into the Wind Mitigation savings when I do the roof since I'm pretty sure it wouldn't be up to spec.

Jared Townsend · Answer

@Glenn Primack I would assert that without knowing the coverage terms and carrier quality we can't know if the policy is a good deal or not; all we know is that it is a cheap price!

With that out of the way...a duplex will be insured on a residential policy while a 6 plex is insured on a commercial policy which has different coverage levels and rating factors. For example, a standard residential policy will provide $100-300k liability coverage while a commercial policy commonly provides $500k-1mil liability.

One easy strategy is to get a wind mitigation report and send it to your agent. This report identifies things like nail size, nail spacing, extra hurricane tie down, etc. and qualifies you for a corresponding discount on the hurricane portion of your premium. Any licensed home inspector can provide one for you.