Help choosing insurance for first time home buyer who's house hacking

[Joseph Spinelli]

Hey all!

First post here and excited to learn!

First wanted to give my scenario:
I just got my first home under contract and getting ready to close in a few weeks, in Round Rock, TX. I'll be living in the property as my primary residence for a year, having roommates to house hack and lower mortgage payments and then looking to begin renting it out after that year as my first investment property and repeating the process. I'm currently shopping around for homeowners insurance and have it down to 2. Here are quotes for what each is offering:

AllState: $1,246.98 for 12 months, my rep with them said they offer 35% off landlord insurance (if bundling home and auto with them, which I plan on doing) so that sounds like it would be nice for when I turn the property into a rental

Iscential Insurance Agency: $1,672 for 12 months, speaking with the agent who is an insurance broker

With all quotes, I am making sure to get an RCV policy, Water Back Up and Sump Discharge or Overflow $20K Coverage and full dwelling coverage on Limited Hidden Water or Steam Seepage or Leakage (recommended this by my realtor in case of flooding).

My questions are, what policies should I be looking for to best fit my investment plans long term? Is it more ideal to go with an insurance broker or a bigger company like AllState? Also if you have any recommendations for who to go with for homeowners insurance in my area?

I'm probably oversimplifying the process so please correct me or feel free to throw in any advice or tips!

[Chris B.]

I wouldn't recommend a LLC in Joseph's situation. With an LLC, there needs to be some separation between the owner and the unit. I presume with a house hacking scenario, you as the owner are doing a fair bit of the interaction with the tenant as well as some portion of the maintenance. My understanding with that engagement, an LLC won't protect you. Second reason is this is your one and only property right now. No need for an LLC with 1 property as its not protecting you unless you have a lot of wealth tied up somewhere else and you were not managing the unit.

I suggest both routes.  Perhaps, try a broker first.  Get a good quote.  Take the quote to a big company and see how they compare.  One thing to watch out for is insurance companies may offer big discounts for the first year and then surprise you on additional years.  Progressive car insurance does this for example.  I got a quote through their online system even though I am already a customer and the online quote was something like 35% cheaper.  I called them about it and they said that was an introductory offer only.