Has anybody considered having no insurance?

Question

With this last round of insurance increases we are paying almost $50 per month per apartment. I am considering how hard it is to collect anything when theres a problem. how much the deductible is means I’m already covering all the smaller items. Then every little claim means my rate climbs again. Not to mention the paperwork pain involved with each claim

Any thoughts on just not having any insurance at all, or just some sort of liability and really high deductible ?

With 6 apartments were at $3600 per year

JD Martin · Answer

If you're not all cash your loan holder won't allow it. If you are in all cash I think it would be crazily short sighted unless you own a condemned slum. $3600 is not terribly high, frankly.

Sam Yin · Answer

@Steven WestlakeQuick answer, NO. As @JD Martin stated, it would be short sighted. I pay for umbrella above the insurance as well.Your rates are reasonable. You need to pass it to your tenants. I'm paying around $50k/y on my 6 apt buildings alone. You got off cheap. I'm sure mine will keep going up, and hopefully not get cancelled here in CA.

Steven Westlake · Answer

@Bjorn Ahlblad - i contacted the insurance company and ask how i could get my rates, one building was knob and tube wiring, I installed 3 x 200 amp SquareD panels my self. So thanks for reminding me it might have more to do with the fact that it was built around 1860, county records show it as 1900, but that is as far back as the records go. The gas light pipe in the walls says 1860 to me, knob and tube replaced that in early 1900’s I suppose .

Bjorn Ahlblad · Answer

Early this year my insurance rate got bumped from 7500 to 10K for a 12 unit, and I was told 2025 may not go at all. Turns out I offered to do electrical and plumbing inspections on an agreed upon punch list. Cost me 5k, the upgrades were not unreasonable, and the electrical work included safety improvements. Rate went back down to 7500 upon completion of the work and 2025 is a safe bet now. It is a very nice building and no, I did not consider skipping insurance, although I suppose I could have, it is paid off. The insurance company was pretty reasonable to work things out with even though it did not start out that way, and they did have my blood pressure up considerably!

Robert Rixer · Answer

I believe the phrase is "self-insure". But yes you're acting like an insurance company, you're pocketing the premium and betting that a catastrophic event won't occur. The difference is you have the risk concentrated on a very small sample size.

Henry T. · Answer

I appreciate the guy that's always looking for a work around. It's the American way! ha ha. You and I both could build ground up, but at my age I sure wouldn't want to, much less deal with the city. I know a guy that has a half dozen SFR rentals, never had insurance on any of them in 40 years, never a problem. Some people are just lucky I guess. I've come close, but I just can't go that route.

Steven Westlake · Answer

@Henry T. - i like to think I’m pretty handy, I’m am a retired mechanical engineer. I do 90% of my own work. 200k I could build brand new from the ground up. The liability issue concerns me, but I’m thinking with a trust holding each property limits it to just that property. Plus if I borrow against and move that money elsewhere, the limit would be value minus dept.

Henry T. · Answer

I think it's debatable. Can you put aside say 200k in the event of a disaster? If you're handy and can handle most damages maybe you don't need it. Still, there's that liability thing. But in my decades of landlording I've never had a liability issue. You're basically playing the odds. Do you want to? Can you afford to? Is it worth it and still have peace of mind?

Owen Rosen · Answer

From 10,000 feet $1,800 per triplex is not bad at all. However, Is it replacement cost or actual cash value? Or something else? What is your current deductible? What else has been updated? What perils are covered? What has specific exclusions or limitations? I could go on and on... There are countless factors in play here and it makes answering this question or assessing cost very difficult. What really matters is what's important to you and whether or not your agent has the skill and market access to ensure you're getting a good value.

Steven Westlake · Answer

@JD Martin-half (1 triplex) are all cash, owe like 59k on other triplex, both buildings are over 100 years old and still standing. If i could find some reasonable disaster coverage with maybe a 10 or 20k deductible, i would be okay with that.