Investor-Rental property insurance

[Rich V.]

Hi all, under contract on my first ever investment property! Its a duplex and is a great deal. Before we get this party started, question foryou pros on insurance. Did some research and sounds like I can’t become an LLC because banks won’t loan to you since they can’t come after your personal assets. Makes sense to me. What type of insurance do you guys get on your investment properties (coverage types, amounts, etc)? Anything specific to look out for? Got a few quotes and thinking $1M in liability is where I want to be, what do you think? Quotes look to be about $70/month on the duplex. Cheers Rich

[Jason Bott]

Originally posted by @Rich V.:

Hi all, under contract on my first ever investment property! Its a duplex and is a great deal. Before we get this party started, question foryou pros on insurance.

Did some research and sounds like I can't become an LLC because banks won't loan to you since they can't come after your personal assets. Makes sense to me.

What type of insurance do you guys get on your investment properties (coverage types, amounts, etc)? Anything specific to look out for? Got a few quotes and thinking $1M in liability is where I want to be, what do you think? Quotes look to be about $70/month on the duplex.

Cheers Rich

 At a minimum, rental properties should have three coverages:

• General Liability Coverage
• Building Coverage
• Loss of Rents / Business Income Coverage

General Liability Coverage - covers against lawsuits claiming you are responsible for Bodily Injury and/or Property Damage.

Bodily Injury – i.e. a slip and fall by a tenant or other person on your property.

Property Damage – i.e. a fire at your property damages neighboring properties you

do not own.

Building Coverage – this mitigates and restores the building from covered losses and this coverage is required by lenders to secure loans.

Building Coverage – i.e. fire, wind, water, vehicle impacts and other elements of structural damage.

Loss of Rents/ Business Income Coverage– pays for loss of rental income when a building that is rented to others is damaged by a covered loss.

Other items to consider:

1) Ideally have Replacement Cost, not Actual Cash Value (ACV). However, ACV may be the only option on older properties.

2) Ask for Special Form, if it is not available, then Broad Form. If only Basic Coverage is available, be aware water and theft claims are excluded.

This is not a complete list, but are the most impactful coverages following a claim. Consult a qualified agent well versed in rental property insurance to review your specific insurance needs.