Typical Insurance Costs for Rental Properties

[Matthew Miles]

I'm wondering if anyone can shed some light on the cost of insurance (hazard & fire, liability, sewer backup, loss of income, umbrella, etc.) that a landlord would pay for a rental property in Utah (Utah Valley to be specific). If that is too broad of a question can someone provide some resources or point me in the right direction? 

Bonus question: What type of coverage do you have for your rental properties? And does that change if you are house hacking? 

Thanks! 

[Michael Badin]

The cost of insurance depends on many things.  One of the most important is the property itself and what options you choose.  I always recommend purchasing replacement cost policies whenever possible vs an actual cash value policy.  It does cost more but int the event of a fire you will be glad you did.  The size deductible also has an impact on your monthly premium.  The higher the deductible you chose the lower your monthly premium you pay.  However if you have a claim you have to exceed your policy deductible before your insurance will kick in.

It also depends on if you are getting a residential policy or commercial.  The way the policies are written are very different.  Many commercial policies are very basic then you have to add in all your options.  For a residential you want an "all risk" policy.  Although many insurance companies are starting to not use this term anymore because it has caused them problems when trying to deny a claim.  Essentially you want a policy that has to specifically exclude a peril (cause of loss) for it to not be covered.  If it is not listed in the policy as not covered then it is covered.  The other option is a named peril policy.  You don't want this, (but it is cheaper) with this type of policy the damage you have has to be caused by something specifically included in the policy for coverage to apply.

In the end you need to determine exactly what your needs are.  Find a good insurance agent.  If you have multiple properties you may be able to "stack" your coverage just like you can with vehicles.  What this means is if you have a liability claim at property "A" that exceeds property "A" coverage but you also have another $1,000,000 liability coverage for property "B" then your property "B" coverage kicks in after your property "A" coverage is exceeded.  It basically acts like an umbrella.  I have my properties stacked, then I have an additional liability umbrella on top of that.