Insurance for vacant property in South Chicago

[Alice C.]

Hi, 

Must I have a property management company in placed before I can get insurance for my vacant property? The house needs rehab, I want to buy insurance to avoid vandalism.  Property is in South Chicago.

Appreciate your recommendations for any good insurance companies.

[Bret Ehlers]

We have had the best success working with independent insurance agents.

They are able to shop rates and coverage with multiple insurance carriers for the best price and services.

Since I am not performing work for other people I only insure the property. I do not carry E and O insurance. (Error and Omissions)

Whether you have buy and hold or rehab properties you will want to have your agent shop for a Landlord / Tenant Policy with a tenant damage rider for your real estate. It should only cost about $650 - $850 a year for the single family, bread and butter properties we buy.

I purchase a separate policy for each property.  I inform the insurance agent that we have acquired the property and we will be getting the property occupant ready so it is understood the property is vacant during the repairs.

We carry a $1,000.00 deductible and if the repairs are $1600.00 we pay it out of our pocket. I do not use the insurance company for property repairs. Insurance is for catastrophe. Do not nickel and dime your insurance carrier for repairs or they will shut off your coverage. With the national insurance registry all carries have access to your insurance history. If you have frequent claims you will not be able to get coverage. In 36 years I have place one claim for tenant damage that was $29,000.00.

Be sure to know the destructive events that are included in your policy. Breaking or freezing water pipes, floor or water damage from inside and outside of the structure, snow, hail and wind damage, roof damage, what if your tree falls on the house or neighbors car, earthquake, break ins with vandalism and what is covered if someone stumbles over their dog while walking on your property and tries to sue you. I deliberately insure each property separately so that it does not drag the rest of the real estate portfolio into the review of the subject property.

Always get in writing the coverage that the agent represents with the policy. Never believe the word of the insurance company unless it is in writing. If you have a conversation over the phone be sure to demand an e-mail follow up from the carrier’s representative for the commitments that were made in the telephone conversation.

I will not use State Farm, Farmers, Farm Bureau or All State. We have had success with Allied, USF&G if they are still in business, Hartford, Progressive, Metlife, http://www.nreinsurance.com/, and American Family. American Family has become more restrictive with their policy coverage in the last 3 years. Make sure to interview several American Family and independent agents before selecting who you will work with. The agent makes a huge difference in the service level you will receive from the carriers.

NEVER HOLD AN UNINSURED PROPERTY

Do not wait to find a property management company before you insure the property.  You always want to make sure that you have the property insured while you have it in your possession. Alert your insurance agent to the closing date of your transaction so that the insurance is in force from the time you close at the attorney or Title Company office. Once your property sale has been completed and you have received your check from the closing you can release the insurance policy from the property.

With all insurance companies you want to know the following:

1. Do they have the products which we use as an investor?

2. Is the price competitive with the other carriers?

3. Do they have a good reputation for quickly and fairly paying their claims?

4. Be sure there is not a time limit exemption for the property being vacant while you prepare it for occupancy.

Always have all of your properties insured from the time you take possession to the time the deed passes to your buyer.

To your successful investing.

It is a Terrific Day!!