Do most landlords get landlord insurance?

Question

I am a new investor in Madison Wisconsin. I am looking to perhaps get a duplex, outside of Madison, that would cash flow. My concern is that it seems finding a property that cash flows is hard in this market. As I use the Bigger pockets rental calculator, figuring expenses, I was wondering do most landlords carry landlord insurance, should I be including this in my expenses?

I contacted an insurance company that is recommended by the local REIA, explained that I was interested in said property and just needed a ballpark figure to see if it would cash flow. I was quote a price $1500-$1700, for a 3900' , 1950's duplex selling for $300,000. The insurance agent stated since I just needed a ballpark, we could discuss at a later date what this would cover.

I understand that insurance is an evil necessity, but including that really makes most properties in a negative cash flow. Do most landlords carry landlord insurance?

Thanks.

Peter Falk · Answer

I'd also consider an umbrella policy for cheap additional coverage.  Also, look into the policy details as I've seen some insurance companies that don't want to cover you on a rental if you rent to students (in Madison, WI students are a protected class you can't discriminate against in at least considering as a tenant, which I mentioned to this insurance company, and their simple response was that they can underwrite policies however they want in mitigating risks).

Matt M. · Answer

@Wendy Busa

If you have a mortgage, your mortgage company will require insurance. Even if you paid cash you still want insurance, unless you don’t care if the place burns and you just wasted $300k.

Bob E. · Answer

We just switched everything over to NREG this year.   In the past we have gotten good pricing with State Farm and All State but with growth we wanted to centralize and NREG already had the bulk of our insurance.

A few tips.

• Don't skimp on insurance.  At some point you will have a loss.   We had a fire in one of our duplexes in April, Rehab cost is 112k,  Our insurance covers 80k of that, we are out the rest.  This is despite my wife doing annual review of coverage limits.
• 
• Get a tenant policy.  Our carrier charges an extra $10 a month for this.  We bill it to the tenant but it acts as a first line of defense for a lot of claims.
• 
• Get an umbrella policy.  If there is an injury on your property you want to be covered.  
• 
• We usually pay $50-70 a month for a SFR in the 100k price range.
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• 
• 
•

Bill B. · Answer

Landlord insurance is really homeowners insurance when the owner doesn’t live there.

In other words, if you have a loan, you will have landlords insurance. If you couldn’t afford the financial loss of a paid off property burning down and not getting reimbursed, you’ll have landlord insurance. If you wouldn’t want to pay out of pocket if there was a natural gas leak and the house blew up killing several people, you’ll have landlord insurance.

You won’t have homeowner’s insurance, at least not on buildings you don’t live in. Landlord policies are usually cheaper than homeowners policies because they don’t cover any personal items inside.  BUT, you should also require your tenants get renters insurance because landlord policies don’t cover any personal belongings.  You’re tenants won’t get $1 in case of a fire, tornado, flood, etc.

Alecia Loveless · Answer

@Wendy Busa My first policy was about $1600 for a 4-plex, then my insurance company has a plan that allows me to “link” the next I’m not sure how many policies because I haven’t reached the limit yet, but they have been in the ballpark range of around $700 or so also for 2-4 unit buildings.

I’ve also got an occupied renovation policy that is allowing me to keep a tenant while doing a big renovation on another unit for a little over $1550 with another policy on a new building I’m closing on in two weeks. They feel this is more dangerous and that there is more liability involved, hence the higher cost. This is only a 6 month policy so obviously we’d like to finish this project as quickly as possible.

Mary M. · Answer

You really need to be insured unless you can self insure.  I cant believe your insurance would be that expensive as my 6M properties ins is 6k/year., I have BO insurance (business owners) and it is for apartment owners.   I would suggest talking to a commercial Insurance agent.

Bo Bond · Answer

Wendy,

Contact Jason Bott (https://www.biggerpockets.com/...).  He posts a lot on BP and is an agent out of Milwaukee.  I'm sure he can help you.

John Underwood · Answer

Absolutely.

It is one of the costs of doing business.

Corina Eufinger · Answer

@Wendy Busa, I invest in Wis and don't have landlord's insurance specifically.  It's not required here.  Many landlords in Wisc have just property insurance because of the way our state functions.  Now that being said many insurance agents in Wisconsin will include a rider for rentals. This comes down to the individual agent and underwriter.  The rider is really inexpensive.

Have a conversation with the insurance agent you plan on using.  For my properties, I'm covered as a landlord with property insurance for $135 every six months on one of my duplexes.

Kevin Phu · Answer

You should absolutely get landlord insurance! You need to protect yourself from tenants and like others have already mentioned, the bank will likely require it for a mortgage.

Do most landlords get landlord insurance?

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