Do You Have a Formula for Estimating Insurance Costs on Multifamily?

[Brandon Sturgill]

I know this varies a lot, but is there a somewhat standard formula to factor certain size properties...6 units typically run X, 8 units typically run Y....etc.?

[Jason Bott]

@Brandon Sturgill any commercial insurance policy will have a property rate, premium per $100 of building value and Liability rate, cost per unit/door.  Commercial Property (4 units or greater) rates in the Midwest are running around $0.20 to $0.50 depending on age, building type and occupancy.  Liability rates are $20-$100 per door.

Using the rates on your current policies, you can back into the estimated annual premiums.  So for example, if you fin dour current property rate is $0.30 per $100 and your per door liability rate is $50, you can estimate as follows,

* $200,000 4 family would be $600 for property and $200 for liability, annual total of $800.

* $200,000 10 family, property is $600 per year and liability is $500 for an annual total of $1100.

The total annual premium will probably vary 5-10%, but will give you a good ballpark.

Lastly, this process works best if you are buying like and kind properties.  If you are buying a single family that is 10 years old and then a 5 unit that is 110 years old, just call your broker and get them quoted out.