Insurance on Duplex...where did I go wrong?

Question

I'm under contract for a duplex in Gulf Breeze and shopped around for insurance. After obtaining several quotes from brokers, I sat on them until we had a close date established. Long story short, our closing was delayed once and urgency was of the issue due to the seller wanting to back out. Below is a timeline of events and this has been an enormously frustrating situation. I'm hoping to hear from the community as a better way of doing this the next time around.

• Friday morning: a close date was finally established for the following Tuesday. Only thing missing was the insurance declaration page. I called the vendor of choice (Vendor A) and she starts the process to bond the coverage.
• Friday afternoon: I learn the quote was rejected from the original underwriter as it was 30 day sold. A new quote from the same underwriter increased the quote 3X and they also wanted to eliminate wind coverage (which is unacceptable in a hurricane zone). I quickly begin to work with Vendor B and after re-quoting, premium was the same, I felt we were good to go. I ended the day ensuring the lending agent and insurance agent had each other's contact info so they could continue the process. 
• Monday mid-morning: I sent a follow-up email to both lending and insurance agent to ensure they've touched base. They had not and as a matter of fact, insurance agent wasn't even in the office. I call Vendor B, explaining my situation and that I needed an agent to help me asap to keep this closing from dissolving. 
• Monday afternoon: the lender and new agent from Vendor B insurance finally touch base with me guiding and performing a lot more hand holding than I've ever expected. It is then realized that quote from Vendor B issues replacement cost, while the lender requires replacement value. Vendor B quickly has to go and rebid, we quickly settle on coverage, and the insurance underwriter has computer problems delaying the issue of the declaration page.

I've never had to be this much involved before and the one leading difference here is the lender. My first time with them and they have become my new 4-letter word. BUT, I can't help but think there is something I could have done better in making sure insurance quotes/declarations don't postpone our closing. But what? I'm clouded by the lackadaisical effort of the lender, I'm hoping the BP community can weigh-in to set me straight. What is the best, most non-frustrating way you've acquired quotes and policies for your rental properties?

#frustrated

Alexander Merritt · Answer

@Jay Helms

Hmm... that's a wacky situation. You stated you got several quotes before hand and was just waiting for a closing. The closing was delayed so that pushed out the 30 day quote factor from the broker. I would expect it might change a little bit, but 3X the cost is absolutely unacceptable when just a few days ago they were willing to quote less. I think you did the right thing in choosing a different broker. If the same underwriter can have that drastic of a quote, then who knows what kind of problems you might have with them in the future. I'm not sure there's much more you could have done.

Jacob Passmore · Answer

@Michael Costanzo has some good advice there ^^

I'm not sure how many properties you have, but the other thing to consider would be a package policy (1 policy for all of your properties) this type of policy can be of a great benefit if multiple closings per year are expected. Generally these products have set rates, so you would have a really good idea what the insurance would cost without obtaining "quotes".. Just something to keep in mind!

Michael Costanzo · Answer

Hey @Jay Helms,

Sorry to hear that it was such a frustrating experience. While I am biased (as an insurance agent) here is what I advise my clients to do. I would hook up with an independent agent in your local area who has expertise in the Real Estate Industry. You want to establish trust with the best agent you can find because they will know the best insurance markets for the property and will pit multiple insurance companies against each other to secure the best quotes. They will also have relationships with the underwriters and may be able to get better pricing and coverage than another agent for various reasons we can talk about privately.  (If you want to keep him honest, ask him to show you the quotes that he secures for you)

A good timeline would be as follows.

1) When you identify a property you would like to acquire - call "your broker" and give him the specs on the property.

2) When you identify the lender you will be working with have them send you or your agent a copy of the insurance requirements to determine if there is any specific language that needs to be met.

3) Identify your closing date and let your broker know he needs to have the quotes ready 2 weeks in advance - If he has been doing this awhile he should be able to provide very accurate indications or estimates before hand.

4)Review quotes- pick the carrier-  Make sure all the applications and "subjectivities" are met a week in advance  ( your broker should be able to help you with this)

5) Bind insurance a few days in advance if they need a declaration page or bind coverage and have your agent send a certificate of insurance to the lender prior to closing.

Let me know if you have any questions- happy to help!

Mike

Insurance on Duplex...where did I go wrong?

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