How much more do landlords pay in insurance

Question

Can someone in the Minneapolis market explain to me how much more in insurance a landlord would have to pay annually. Any feedback would be much appreciated. Thanks

John Woodrich · Answer

Your questions asks how much more a landlord will have to pay for insurance...  How much more than what???  A homeowner's policy???  If that is your question - generally you will pay less for a rental policy than you will for a homeowner policy.  That has been my experience through State Farm and I have had 4 separate properties that I have lived in and rented at different times.  Makes sense when you consider that you don't have all the property coverage, etc that has to be insured.

If you have an OLD property this may not be the case.  In MN the AG came down on insurance redlining on houses that they thought may have old wiring.  Insurance companies would add an additional charge to compensate for the perceived risk and were fined by the AG.  They still have it on rental properties, at least State Farm does.  That can make a rental more expensive but if you run into this choose a different provider.

Tim Swierczek · Answer

@David S. I do not have any 4 plexes.  $1800 sounds like a steal.  Make sure the rebuild cost is not grossly off base since most LL policies do not include guaranteed replacement cost.  The coverage limit is usually all your entitled to.  For that price difference it might be worth taking a low face value, just make sure you know what you're getting yourself into.

JD Martin · Answer

I am not in Minnesota, but in TN I pay an average of ~$600 annual on single family houses, about 1100 SF, with 1mil ea/2 mil aggregate liability.

David S. · Answer

@Tim Swierczek Do you have any 4plexes? I had one quote at $1800 for my 1900s era fourplex, but the next cheapest was around $3600.

Christian Barth · Answer

@Tim Swierczek thanks so much for the reply and breaking it down for me. Good information.

Tim Swierczek · Answer

Hey @Christian Barth there are several factors at play.  A few of them are:

Age of home (This is a very big factor for most companies)

Number of units

Size of home

Cost to rebuild

Age of mechanicals (roof, furnace, electrical systems, plumbing systems)

Deductible

Your credit

That being said, I budget $1,800/year for 1900  built duplexes in Minneapolis.  Lately, I have been seeing 1,500-1,600/ year on these properties.  It would be much less if the homes were bult in the 50's or later.