Fourplex Insurance Estimate?

5 Replies

Hey BP community,

I have a quick question on insurance prices.  I was wondering how much I can expect to pay for insurance on a $220K fourplex.  I understand that a lot goes into quoting an insurance cost, but I am just looking for a very general estimate for my property analysis while I wait on my insurance dealer to get back to me. For perspective, I was quoted at around $900 for insurance on a $100K duplex that would be in similar condition to the fourplex. Thanks in advance for the help!

- Lucas Duce

@Lucas Duce

Here’s your super general “I don’t know where your property is or anything else” rough quote.

I pay about $92 a month on duplexes worth $275-300k.

@Anthony Wick

Thanks for the reply Anthony.  With that super general quote of $92 a month on a duplex around $300K, Is it it safe to conclude that insurance prices don't increase linearly with the cost of the house? So, in my area for a $100K duplex built in 1910 in decent/good shape, it would be about $950 a year ($79 a month), would a fourplex built the same year and in the same condition for $200K run around $1,200-$1,400 per year (~$108 per month)? I've been estimating an insurance cost of around $1,800 per year ($150 per month) for a $200K fourplex assuming a linear increase in insurance cost with increasing price.  Am I way over estimating how much my insurance will be? Thanks for the help!

- Lucas Duce

@Lucas Duce

You’re probably overestimating. However, shop around. I’d get like 4-5 quotes. Are you part of a real estate investment association? Somebody will know who to call for best insurance in your local area.

Originally posted by @Lucas Duce :

@Anthony Wick

Thanks for the reply Anthony.  With that super general quote of $92 a month on a duplex around $300K, Is it it safe to conclude that insurance prices don't increase linearly with the cost of the house? So, in my area for a $100K duplex built in 1910 in decent/good shape, it would be about $950 a year ($79 a month), would a fourplex built the same year and in the same condition for $200K run around $1,200-$1,400 per year (~$108 per month)? I've been estimating an insurance cost of around $1,800 per year ($150 per month) for a $200K fourplex assuming a linear increase in insurance cost with increasing price.  Am I way over estimating how much my insurance will be? Thanks for the help!

- Lucas Duce

Lucas, you are correct in that you pay more for insuring the 1st $1,000 of Building coverage than you do for say the $1,000 between $190,000 and $191,000.  The insurance company bases this tiered cost on the % of Building Replacement Cost insured.

In your example, if your duplex is 2,000 sq/ft and the 4 plex is 4,000 sq/ft, then your assumption is correct.  If the duplex is 1,200 sq/ft, and the duplex is 4,000 sq/ft, then your estimates will be off.

A common mistake investors make is using the market value as the main value in the insurance equation.  In order to avoid bad estimates, use the Buildings Replacement Cost, (Square footage X Cost per sq/ft to rebuild) as the center of the insurance premium equation.