Do you rent out your property without home owners insurance?

General Landlording & Rental Properties
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Do you rent out your property without home owners insurance?

Brian Powell
Merritt Island, FL · Member since 2016 · 14 posts · 0 votes

I'm looking to buy my first investment property in Merritt island or Cocoa Beach Florida area and I would like to know if there are others who roll the dice on not carrying a full home owners insurance policy. I would be paying cash on a 3 bedroom house so insurance and flooding coverage is not required by any lender. Anyone who buys on East Coast of Florida knows the pain of high insurance rates so I would like to hear some opinions from those who have already made their decisions. This house will either be 2 blocks from the beach or 3 miles west of the beach, depending on if I buy in Cocoa Beach or Merritt island. I'm pretty sure that full insurance policy will run around $3000 per year + $400 for flood. For those of you that have opted to not carry full insurance, have you opted for renters coverage (theft, injury) or umbrella policy only (liability). 

I appreciate any input I can get on this.

BP

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Dale Walker
Investor · Rigby, ID · Member since 2016 · 52 posts · 45 votes
9y

Always have insurance on your property which covers the building and protects you. I have my renters responsible for their own property. When they move in, I tell them my insurance only covers the building and it does NOT cover any of their stuff. They need to get their own renters insurance to cover it in case of fire, flood, or theft. 

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  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y

    Rentals should be on a Landlords Policy, not Home Owners, as it provides liability coverage :)

    0Reply
  • Brian Powell
    OP
    Merritt Island, FL · Member since 2016 · 14 posts · 0 votes
    9y

    Yes thank you Jeff, I have read that. My question is, how many owners choose to rent out without carrying the Landlords Policy. Thank you for the clarification

    0Reply
  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y
    Originally posted by @Brian Powell:

    Yes thank you Jeff, I have read that. My question is, how many owners choose to rent out without carrying the Landlords Policy. Thank you for the clarification

     Tong-in-cheek:  Are you a lemming?  Don't follow the crowd on this!! 

    1Reply
  • Dale Walker
    Investor · Rigby, ID · Member since 2016 · 52 posts · 45 votes
    9y

    Always have insurance on your property which covers the building and protects you. I have my renters responsible for their own property. When they move in, I tell them my insurance only covers the building and it does NOT cover any of their stuff. They need to get their own renters insurance to cover it in case of fire, flood, or theft. 

    3Reply
  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y
    Originally posted by @Dale Walker:

    ... I tell them my insurance only covers the building and it does NOT cover any of their stuff. They need to get their own renters insurance to cover it in case of fire, flood, or theft. 

     I make it much stronger - - it's a clause in the lease and they must initial that they have read it.

    0Reply
  • Matt Faix
    Investor · Carnegie, PA · Member since 2014 · 259 posts · 144 votes
    9y
    Agreed, I would definitely carry insurance. Way too high of a risk to not have a policy in my opinion.
    0Reply
  • Kim Meredith HamptonBusiness Member
    Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
    9y

    @Brian Powell not sure why you would ever go without insurance on your investment. I always say, insurance is expensive until you need it!!! 

    I have been doing property manager for over 20'yeats and have seen some pretty scary and wild things happen, if the investor/landlord had not had insurance, they would have been in a world of hurt!! 

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    1Reply
  • Brian Powell
    OP
    Merritt Island, FL · Member since 2016 · 14 posts · 0 votes
    9y

    @Kim Meredith Hampton I guess landlords insurance policy is like health insurance for cancer coverage. When you pay 3000 per year in florida for a policy its so hard to swallow knowing that money could buy an entire new roof every 3 years. 

    0Reply
  • Samantha Klein
    Investor · Monroe, WI · Member since 2015 · 691 posts · 610 votes
    9y

    @Brian Powell I think carrying insurance is a must however I have heard of some investors "self insuring" which is basically if an investor owns alot of properties, they don't pay the premiums and can save alot of money, of course if something goes wrong they are out of pocket. I could see it working around 50-60 properties.

    0Reply
  • Jaclyn Peyton
    Lake Saint Louis, MO · Member since 2016 · 28 posts · 7 votes
    9y
    Do you have enough equity or collateral to self insure? If a rebuild was necessary, would you be able to keep the property as a buy and hold or would you sell? Without insurance what does Plan B look like? That's the ultimate question when deciding- look at all possibilities and define your "what if" strategy.
    1Reply
  • Paul Ewing
    Investor · Boyd, TX · Member since 2014 · 688 posts · 467 votes
    9y

    My policies range from $300 to $1300 and I do not quibble a bit. I do carry $1000 deductables and may increase them further. I want them for major losses like fire and for the liability coverage not little things. And on many places I consider a roof little.

    0Reply
  • Kenneth GarrettPro Member
    Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
    9y

    @Brian Powell

    I do not know why you would take such a gamble.  The cost of insurance has to be incorporated into your numbers.  The loss of the property by fire, storms or just plain injury by a fall could destroy you.  Liability insurance is a must.  If the insurance is going to kill the investment I would suggest investing in another area. 

    On Bigger Pockets a lot of time is spent on discussing asset protection. How to protect yourself; umbrella policies, LLC, Trust, etc. I do not think I have read where the insurance was to high it wouldn't be bought.

    Protect yourself.  There is no upside on this, buy the liability insurance and whatever else is needed.   

    Good Luck.

    0Reply
  • Jason BottPro Member
    Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
    9y

    @Brian Powell 

    At a minimum, get Liability.  My FL investors who carry liability only, pay $150 per year for a $1M Liability limit.

    On the property side, you may want to try and get some options with a $5k or $10 k deductible.  

    Also, 2 blocks compared to 3 miles makes a huge difference in premiums.

    1Reply
  • Brian Powell
    OP
    Merritt Island, FL · Member since 2016 · 14 posts · 0 votes
    9y

    Thanks Jason, I may look into that option for liability.

    @John Anderson : I dont understand the connection between self insuring a property and renting out to high risk tenants. What is it you were trying to say? I would never choose to rent to a high risk tenant, I would have to be unemployed and desperate to make that decision.

    0Reply
  • Geoffrey Schnake
    Property Manager · Saint Petersburg, FL · Member since 2016 · 113 posts · 87 votes
    9y

    I did that for a couple of years.  My thinking was I owned homes for 30 years and never had a claim. Then one burned to the ground.  It was a 130k loss. I realized I could have paid a lot of insurance premiums for 130k,  plus  it's written off on taxes.  Needless to say,  all of my properties are insured now.

    0Reply
  • Brian Powell
    OP
    Merritt Island, FL · Member since 2016 · 14 posts · 0 votes
    9y

    So sorry to hear that happened to you Geoffrey, that is very unfortunate. I wonder if it would be possible to get landlord policies for everything except hurricane coverage. The fire protection is definitely important. I'm not too worried about hurricanes, from everyone I've known in my 33 years the worst that has happened is loss of a roof which would not be worth paying 3k per year on.

    0Reply
  • Geoffrey Schnake
    Property Manager · Saint Petersburg, FL · Member since 2016 · 113 posts · 87 votes
    9y

    Yes Brian.  I'm a glutton for punishment  so I have wind exclusion policy's on all my properties.  They are all over 50 years old and have not blown away yet. I'm rethinking that however.  One hurricane Andrew  type event in my area and I'm done. Wind exclusion  reduces the insurance  amount by about  half.

    0Reply
  • Brian Powell
    OP
    Merritt Island, FL · Member since 2016 · 14 posts · 0 votes
    9y

    @Geoffrey Schnake

    "Wind exclusion reduces the insurance amount by about half"

    You sir are my hero, I will strongly consider using this policy when I rent out. Thank you for the tip :)

    0Reply
  • Scott F.
    Rental Property Investor · Grand Rapids, MI · Member since 2017 · 113 posts · 91 votes
    9y

    @Brian Powell

    Wow, so many great replies: yes get insurance point, out that it doesn’t cover the tenants possessions have them get renters insurance.

    Insurance is a must!

    0Reply
  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    9y
    Yeah skip the insurance. Take that money you're saving str8 to the casino.
    0Reply
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