Insurance for Residential Portfolios

[Matthew Hammond]

Hey all,
I was just curious what companies and insurance policies people are using for those who have more than 4 SFR or 1-4 unit residential rental properties. Currently I have 8 rentals ranging from single families to 4 unit buildings. My first insurance carrier (USAA) limited my standard fire/liability policy to only 4 properties so I just went out and picked up a Liberty Mutual policy for the remaining 4, but now I'm in the same problem since LM won't insure more than 4 either. They also don't insure LLCs, they insure me with the LLC named as an additional interest on the policy... which is probably fine but who knows.

Anyway I have also been having issues recently with the carriers conducting their own inspections and then randomly determining that repairs are needed (USAA cited that the gutters on one of my properties needed to be replaced so they cancelled the policy pending a licensed contractor to do that), their coverage for the houses seems to vary, and the premiums are really quite high to be honest. I was trying to find one company that would insure 8+ separately deeded properties but I haven't been able to find one from a company that I knew.

Who do you guys use and how much coverage do you get? Any thoughts or ideas?

[Tim Norris]

If your LLC owns the property, it should be the named insured, not the additional insured.

As a general rule, carry the amount of coverage that is relative to what you would do with a property in the event of a "large/catastrophic" loss. In other words, if you would not rebuild, carry sufficient coverage to offset the "economic" value (including mortgage, etc...), but avoid claim penalties by either carrying enough coverage to offset co-insurance requirements---or engage with an insurer that offers coverage without. If you would re-build after a loss, carry enough coverage to sufficiently do so. Understand that the term "Replacement Cost" (RC) isn't "reconstruction value". An RC policy simply allows you to recoup the depreciation that is initially levied against a claim settlement, by making the repairs.

There are Programs/coverages that can accommodate what you describe, too: no inspections, all locations (even owned by different entities, in multiple states) aggregated, etc... ; )