Help Choosing Insurance

[Casey Goldman]

In the process of closing my first investment property (rehab-ed 4-plex in Phoenix, AZ)  and had a question about selecting insurance provider.

I am trying to decide between Farmer's ($1,779 premium, $2.5k deductible) and State Farm ($2,335 premium, $10k deductible)

Coverage differences--Farmer's is looking at it as 2 duplexes vs State Farm looking as one 4-unit. Farmer's replacement cost is $282k vs State Farm $344k. Other coverage is comparable (personal property, loss of rent, liability, etc.)

I'm thinking of going for the cheaper policy (Farmer's) but a friend advised that State Farm is better at paying out if needed--is this worth an additional 30% premium?

Thanks for your help!

[Anthony Lee]

@Casey Goldman When comparing quotes, coverages, costs, and insurance carriers, there are several things to consider. 

First and foremost, its important to consider the risk managements aspect of insurance as to where your risk tolerances lie. 

Other than that, there are a few things which stick out immediately and should always be considered. 

• If it is a 4 Unit property, under one roof, why is farmers looking at it as if its two different two 2 unit buildings? 
• Which perils (causes of loss) are covered? 
• Are the limits for loss of rents accurate per your needs? 
• Does one have particular endorsements or enhancements or special coverages that the other lacks? 
• There is a HUGE difference between having to shell out $2.5K vs $10k in the event of a loss. Are you comfortable shelling out $10k at the drop of the hat? or is $2.5k more manageable?
  • In this case, sure there may be a roughly $600 difference annually in premium. and the Lesser deductible option is cheaper in this case.