MFH insurance costs typically?

Question

Curious what people are paying for insurance on their multi's.

I know it changes based on property/location.

heres generally what i have been looking at;

example, 10 unit, brick  multi unit building, 3 story, in good condition that is generally fully occupied.   assume a purchase price of $300k and im looking for market value insurance, not replacement cost.

what range would you anticipate seeing insurance costs come in at?

Jason Bott · Answer

Account Closed

I just had bank force my client into a Replacement cost policy.  Even then, an ACV policy is not always the cheapest.

Next, the main property characteristics that will have a negative impact on your premiums are;  fuses or any aluminum wiring, roof older than 20 years, age of building greater than 30 years old with most very few players after 50 years or older.  If you have any of those, be prepared to pay on the higher end.

A lot of insurance companies are not willing to offer market value, which is referred to as Actual Cash Value.  It makes for a messy claim as you will most likely paying out of pocket for a % of the claim.

Jason Bott · Answer

@Mark Mosch

Good strategy with the Umbrella, this is definitely a  way to keep cost under control.  A few things you want to make sure of when using this strategy.

1) Make sure all locations and polcy #'s are listed under the Umbrella if using multiple insurance companies.

2) find out where your umbrella picks up the coverage.  In the personal lines market,  Umbrella's pick up @ $250k, $300k or $500k.  So if you have a $300k policy, and an Umbrella that picks up @ $500k, you would have a $200,000 gap in coverage.

Lastly,  the demand from the insurance companies requiring RC is nationwide.  this trend won't change until the insurance market softens again.  It will be a few years.

Mark Mosch · Answer

Agree with the abovementioned people.  The biggest downer i've found is that most insurance companies force you into replacement cost, which can be up to double what you are paying for a given property.  If you are rehabbing something and redoing major stuff such as wiring, roofing, and plumbing, you will get a better rate when you show them the contractors invoices for these items being redone.  As an example, i just got a policy for a 4 plex i bought in Texas.  It was bought for $210,000.  The policy cost $1,833 and gave me $291,000 building replacement coverage, and $300,000 liability limit - plus other misc things like loss of rent...etc...  Since the $300,000 liability is a little low, what i did separate is buy a personal umbrella policy for $1,000,000 so i am covered now if something comes up over that $300,000.  I was able to cut the policy down by getting the umbrella, and the umbrella will serve me for anything i have on any of my buildings, not just this one - so that might be a way to save some money going forward.  For the best rates, definitely try up front to specify you want just the actual cash value insurance, so you can rule out all the companies that force you to do replacement cost.  Good luck - it's quite a nice racket the insurance companies have going here...

Colleen F. · Answer

You have to call, it depends on the property.  I can tell you we have a stone building and that contributes to the cost and given the age of the property we had no luck getting quotes so for 6 units it is over 1000/unit but the guy before us was paying 2000 for the entire property.   That carrier would not even quote it for us.   We are in the northeast on the high end I hope ,  and the loan company had parameters for the coverage that we could meet with this policy which include replacement cost ($$$). We are trying to get other quotes after some upgrades.   Have them quote the property don't wing it.