what should I expect to pay for insurance for single family

[Chris Fayling]

     hello bp I hope everyone is having a great day. I have a single family 2 bed 1 bath that a wholesaler has brought to me. It meets the 1% rule at about 1.5%. All the other numbers are working in the calculators, except I'm basically guessing on insurance. I was wondering if there is a rough idea of what I should budget for without having to get a quote from my insurance company. As you can tell by the question I am relatively new to this. The home is located in kalamazoo, mi it is city certified and has a newer roof, there is a tenant in place, its turn key but is under market value. Im just curious how other investors come up with a number to run for analyzing? Any advice is appreciated, thank you for reading.

-Chris

[John Mocker]

Chris,

I have posted this info before but I thought it was worth reposting as it may help you when you are quoting this new property:

Below are some general items of information that will help in your process:

Here are some things to lookout for from an Insurance prospective:

1. Any in-ground tanks (active or inactive)

2. Any Knob & Tube or Aluminum Wiring

3. If built before 1978, does the building have Lead Safe certifications

4. Any wood stoves or secondary heating units. If so, were permits pulled

& were they installed by a professional

5. Are any of the homes rented to students

6. Is there a flat roof

7. Are there asbestos shingles

The Year that the following were updated (either partially or fully) would be good to know:

- Heating systems

- Roof

- Plumbing

- electrical

Some companies will not write properties with systems that have not been updated.

As long as you are living there, the proper policy for a 1-4 family is a "Homeowners" policy . If the property is solely tenant occupied you will be looking for a Dwelling/Fire Policy (may be called a Landlord policy or similar name) or a commercial policy such as a Businessowners or Package policy.

Most homeowers or dwelliing/fire policies include:

1.Dwelling (Building coverage)

    The limit should be based on the Replacement Cost of the building (cost to rebuild with

    the same kind and quality excluding the foundation)

2.Contents (Personal Property): most homeowners policies give a set % of the Building

    limit for Contents. Dwelling/Fire policies requrie that you request a limit for conents.

3.Detached Structures: for other buildings on the property (ie. sheds & detached garages)

    Again, there is normally an included limit of 10% of the building limit. That can be increased

    if needed.

4. Loss of Use / Loss of Rents: Normally, there is a 20% included limit. Loss of use is for

    your additional expenses if you can not live there due to a covered claim (ie. Fire). The

    Loss of Rents is for the loss of Rental income if the tenants can not occupy the house

    after a covered loss.

5. Personal Liability: For claims due to Bodily Injury or Property Damage that you become

    Liable for and which is covered under the policy. Companies normally offer limits up to

    $500,000 but some offer $1,000,000. Buy the max.

6. Medical Payments: Provides coverage for an injury suffered on the premises. Does not

    require proof that you were at fault. Used to keep small loses into becoming lawsuits.

    Normally offered up to $5,000 but check to see if higher limits are available.

7. Deductible: This is not a coverage but rather your portion of a claim. Most better policies

    will not have a deductible for either the Liability or Medical payments coverage. It will

    apply to the other 4 coverages. You can select the amount of the deductible, usually

    ranges from $500 to $5,000. The higher the deductible the lower your overall premium

    but get quotes on all the deductibles you are interested in. Sometimes the incremental

    savings from $1,000 to $2,500 or from $2,500 to $5,000 are too small to make the higher

    deductible worthwhile. ***depending on how far the house is from the coast, you may

    also be required to have a separate Wind or Hurricane deductible. Most times, the

    deductible will be 2% to 5% of the building value. That is a significant amount

    (on a $500,000 building that comes to $10,000 for 2% or $25,000 for 5%). A policy

    with a higher premium may be a better deal if it does not have a wind deductible.

There are many endorsements that are available on the homeowners policy. Without

knowing the details I cannot suggest which would be right to add on.

Several you should pay attention to are:

- Ordinance & Law: Provides additional building coverage to deal with rebuilding cost

    Increases due to changes in Zoning or Building laws

- Personal Injury Liability: Libel, defamation of character, wrongful imprisonment, etc.

    (normally recommended, especially if you are a landlord)

- Water Backup: For water damage due to the backup of Sewers or Drains.

- Personal Articles: Coverage for belongings that have a special or collectors value

   such as Jewelry, Furs, Fine Arts, Collectibles, etc...

Your age should not be a factor on the pricing but, depending on the company these other factors may get you credits:

- Insurance Score (company pulls certain info out of your credit report)

     It is not your credit score but generally better credit will result in a better score

- Time at your job

- Education level

- time at current residence

- Claim history