Rental Property Insurance + Security Deposit Accounts

[Matt Z.]

Hi All,

Been a landlord for a few years in CT, but am curious as to what others are doing concerning 2 items:

1) Insurance for non-owner-occupied Multi-Family properties.

I recently switched a 2-family that I used to partly owner-occupy to a Landlord policy, since it is now fully rented.

It's in a great area, in awesome condition, updated plumbing/electrical/safety, etc.  Wonderful property with great tenants.  TOTAL nightmare to find landlord insurance - I spent 2 months of heartache and runaround to eventually find a good rate. 

What are you doing for insurance?  Is there a better type of policy to insure a small multi-family rental?  This is in New Haven (but an "A" area) and an older building so I understand there are costs associated with that.  The 300% swings in price from one carrier to another are what I don't understand.  

2) Security Deposits.

Are you simply holding these in a savings account, in your own name, separate from your other funds?  Or creating one of the "CT Security Deposit" accounts that no bank seems to understand a thing about?  I found one bank that would actually do them, but its a complete nightmare each time.  The staff has no idea what they're doing - yet another thing I've spent a month calling around about with no straight answers.  Other banks want the tenants to appear in-person, which is a burden and in some cases not even possible.  None of my friends who rent in the area, regardless of mom & pop landlord or major management company, have had to fill out W9 forms nor appear in person at a bank...

The interest rate on those escrow accounts is comically low, barely above the state minimum that you are required to give back to the tenant.  Seems a bit silly when there are 1%+ savings accounts available.  When you have a great tenant that's been with you for 4 years, it's almost embarrassing to hand them back their money + $3.17.