How to reduce property insurance premiums?
Hi fellow investors,
I have multiple SFH investment properties in NC and it seems like every 6 months the insurance premiums keep creeping up. The property values in our town have seen a sharp rise in the last two years and our insurance company is now using a BS and greatly inflated 'rebuild cost' estimate to justify their increase in premiums. I do not file any claims and the increase in premiums are lowering my monthly cashflow. Seems like everyone else is profiting from my hard work and risk.
Is there a way to just use one 'umbrella policy' to cover my rental property insurance needs...or a better way that keeps my insurance premiums at a reasonable level? Any help is greatly appreciated.
Chris
Hey Chris,
I'm in the same boat. We had a good size hail storm in last year in our area last year so I'm seeing some steep increases as each one comes up for renewal. I had two get hit by the storm that got covered completely, so I fully understand the benefit of good, replacement cost insurance, but I've been seeking a cheaper route as well. I'm having another company quote our portfolio currently, but I've realized it's not a simple feat. The questionnaire I received to fill out for each property was something like 38 questions, x 8 properties plus our auto policies, I've spent quite a few hours on this now. Have you looked into getting quotes from another company, or asked your agent about your umbrella policy idea?
Cory
The only thing worse than having to pay the insurance premiums is not having insurance when you need it. Or having an insurer that won't pay a legit claim.
Shop around and screen your insurance companies like you screen your tenants (maybe better?). Review your policy and rates at least yearly. Get referrals from your meet up group. Raise your deductible from $500 to $2,000 or more.
Remember that when the midwest gets hit with floods or the South gets hammered with hurricanes, the insurers will be paying out big bucks. You already know who is really going to pay for their loss.
@Chris Blank I feel you Chris. I too ask, what insurance company has the best rates for real estate investors? Insurance can take a big bite out of one’s cash flow. And then multiply that times the number of projects being held by the investor and it’s a lot. Can someone help?
I was looking for ways to increase my cashflow recently on a SFH property and after taking a hard look at my expenses, I was able to lower my insurance cost a few ways.
First, I realized I was over insured as it seems some insurance companies like to do. We built a house to live in near one of our rentals recently, so I know what price per sf ($112/sf) we paid for that, and the finishes in our rental aren't as nice as our house. So even being conservative and using the same price per sf I figured out that I was insured for about 25% ($198k vs. $148k) more than I need to be. I called my insurance company and got a quote for the lower coverage witch they went on and on about how accurate their numbers are for rebuilding, but when they finally provided a revised quote it was a few hundred dollars cheaper a year.
Second, then I shopped around using my new replacement cost amount and found a company that was even a few hundred dollars cheaper than the revised quote from the company I used at the time.
In the end I have a policy with a new company that is about $400 cheaper a year, which increased my cashflow $33/mo. This is a decent increase since the property is cash flowing about $160/mo.
@Chris Blank I have buddy out there who may be able to help. DM me