Insurance Shopping- Any "rules of thumb"?

[Andrew West]

Hello Friends-

We are under contract on two duplexes in Michigan, and shopping for insurance (everyone's FAVORITE topic). We are fairly new to this so, as we learn about all of the different aspects of a policy (ACV vs. replacement cost, deductibles, premiums, etc.), I'm wondering if anyone uses any "rules of thumb" when choosing your policy as an investor. Perhaps those in the insurance world specifically have tips on how to think about the various priorities? Please don't give me the classic "it depends on your goals and your risk tolerance" responses. I already know that, as a general rule, we "purchase" peace of mind with higher premiums so that if something does go wrong we have better coverage. I am genuinely looking to get educated as to when the numbers make sense for an ACV policy vs. replacement cost, and how I should be thinking about this. Thanks in advance!

[Joe Splitrock]

@Andrew West my best advice is to shop multiple carriers and go for high deductible and lower total coverage value. Insurance isn't something you ever want to use. Even if the damage is above your deductible, it is sometimes better to just not place the claim. Insurance carriers can increase your premium or drop your coverage if you place too many claims. Unfortunately insurance companies talk to each other, so both you and your property get added to a database when you make a claim.

I would recommend listing all your properties with the same insurance company and get a blanket liability policy on top of each property. The blanket policy adds liability coverage on top of your single property policy. Instead of $500K coverage, you can get millions in liability coverage. If someone sues you, the insurance company defends you to avoid pay out. 

People will recommend company X or company Y, but be aware that insurance rates are regional and change over time. Company X may be cheapest in your city but most expensive in another city. It also changes over time, so the cheapest company today could get more expensive in the future. They adjust their rates based on their objectives and risk premium in a given market. If they want to grow their client base in your city, their rates may be lower. If a major storm forced them to pay out in your market, they may raise premiums to cover the loss.