Insurance premium seems really high

10 Replies

Happy New Years everyone. I'm closing on my first BRRRR soon and have been shopping for insurance. I've gotten quotes on insurance but they seem much higher than I expected. Trying to figure out why my quotes are coming in at $2800 for a yearly premium. Here's some details:

Property in Houston TX 77009. Built in 1945. Square footage 1200. Will be vacant and under rehab for 60 days

Dwelling coverage $175k

Liability 1MM

Deductible $10k (premium was even higher before with 2.5k deductible)

Again my first deal, but based on what I’ve seen from others, seems super high.

Some (most?) landlord policies allow 60 days of vacancy. They aren’t intended as builders risk policies, but can serve the same concept if you stay within their timelines.

Check with a knowledgeable broker/agent though. This has worked for me, but I’m far from an insurance expert.

@Carla Gordon

I would hop on a call with the agent and you can always get other quotes to compare. Not sure what your area is like but it may be on par. Check with other companies and see what you get back.

@Carla Gordon

Yikes! I have no idea what your area is like, but for a 1450 sq ft house, $225k replacement value, $500k liability, $1000 deductible, I pay $500/year.

Property insurance in Houston and any city in the Gulf Coast will be higher than other parts of the country because of the storm coverage required, and only offered through Texas Winsdtorm Insurance association, so it's difficult  to compare any policy to coverage outside this area.   And it has been my experience that it gets crazier with anything larger than  2 units, so you have to project that into your analysis as you continue to buy.  I personally have been trying to avoid areas in the TWIA zip codes.  But like others have said, shop around.  I use Sean Mertz Allstate (ask for Ben Collins) and Spearhead Insurance for single family homes, NREIG for small multifamily. 

@Carla Gordon Get insured for the net insurable value from your appraisal. This will be the minimum you are required to get by your lender. Most insurers quote you for the replacement cost rather than just the minimum insurable value (total value less land). Will save you 1000s of dollars. I have a really cheap insurance contact if you are interested shoot me a message.

@Carla Gordon

Sounds super high. Keep shopping. So many of these companies aim way high.

Are you near a source of water, or in a flood zone? That's the only reason I could see it being so high.

Another thing I do, is cut coverage. 1MM liability seems high to me on a property worth $175k. Does it need a complete gut, or is there foundation or roof needs? If no to all that = look to reduce to $650-750k. Comb through your coverage details and get the scissors out. Do you have rent reimbursement for of rents (many ins lump all us investors into this pile and charge $50-100 for this coverage). In your case it's a flip - dont need rent coverage.