All Forum Posts by: Jason Bott

Thanks @Chanté Owens for the mention.

@Keishee Hilldepending on what you are looking to insure will depend on which companies to consider.  In IL, I am pretty sure MetLife will only insure your rental if they also insure your home and auto.  There are 10-20 options for for a stand alone commercial rental policy that is not tied to you personal policy.  PM me if you want to discuss further.

@Aaron Crow

@Wes Shive

This type of policy is the norm in the commercial insurance space, nation wide.  Coverages are the same or better as the underwriters may start to compete on coverages offered, not just pricing. 

Once you get to several hundred units, no one (client, agent, underwriter, book keeper) wants to just sort invoices, track policy #'s and cut checks several hours a month.  That being said, I have schedules as small as 2 or 3 locations.

@Randy E. you are blending personal policies with commercial. Personal homeowners policies do not have co-insurance clauses, so this is most likely not an issue if it is tied to you personal policies. Adam has 10 SFR on a commercial policy, so this is a clause he needs to be aware of.

Most people feel the same way you do, but look at it from the insurance company's view.  2 homes insured for $50k each, 1 is 500 sqft, the other is 1000 sq/ft.  On the second house the insurance company has 2xs the exposure to pay out $50k. 

Bottom line, commercial insurance policies have multiethnic different ways they can be structured.  You just need to be aware of what that structure is.

If your paying higher than $110 per unit per year, your paying too much!

$110 per unit gets you $1,000,000/$2,000,000 General Liability policy on a monthly pay plan.

Just want to expand on @Ryan Dossey

 strategy, which many of my clients use.  Realize that many policies will have a coinsurance penalty.   If the building is insured to far under the Replacement cost value, you are sharing in the loss with the insurance company.  Also, only 2% of fire claims are total losses.  The partial claim is where landlords get into trouble.

Using @Adam Craig's example, the insurance company is stating the rebuild is $169k, but wants to insure for $70k.  Insuring 41% of the replacement value, could give you a claim payout discounted by 59% (the actual claim calculation is not this simple and I am probably off a few %).  So on a $40k fire, you would get $16,400 less your deductible.  If it is an Actual Cash Value policy, they could depreciate the claim even further.

Some landlords understand this and we have structure the insurance program to match their higher risk tolerance in exchange for premium savings.

These are all viable strategies, just do your due diligence on how your policy will pay out.

@Adam Craig

You need to determine what you want the policy to do when you have a $5k loss, a $25k loss and a total loss.  Then make sure your agent structures the policy and coverage forms to create these results. 

I think everyone is stating that this question is like asking "What stocks should I invest in?"  Each investor has different financial resources, skill sets, and risk tolerances that can drive the type of policy and values they insure for.

Thanks @Account Closed

is referring to.

Foremost

Westfield

Auto Owners

Berkshire

Affinity Group has a national program that many on BP use

Good luck!

@Adam Craig

Too many claims will get you canceled.  No one can give you the exact # of claims or amount of payout that will get you canceled as the insurance market is different region to region.   

I can tell you that  the commercial insurance companies monitor an accounts "Loss Ratio".  This is the % of payout for every $1 they collect.  Usually looking back 3 or 5 years.  If your 5 year premium is $14,000, and the roof claim was $7,000, you have a 50% loss ratio.

Anything under 30%, they are making $.  70% is their break even.  Anything over 70%, they will consider raising rates or canceling. 

If they cancel, that is when you may get large premium increases as no insurance company wants to write an account that has multiple roof claims in the last few years.

@William Carson

 most personal lines companies, Allstate, State Farm, etc., will not have the right product for flipping homes.  They will typically have 3 separate/different types of policies to cover this process.

Vacant policy, Covers the property prior or after the renovation phase, and proior to anyone living in the home.

Builders Risk, which covers the property during the renovation phase, but becomes void upon completion or occupancy permit.

Rental/dwelling policy, covers you when it is  being rented out.

There is a product in the marketplace that can cover all 3 of these stages with 1 policy.  No need to keep starting and stoping policies with potential gaps in coverage.  PM if if you would like additional info.

@Sam B.

 $1500-$2500 is the minimum annual premium.   This could cover 1 unit or 50.  I can not say how many units you need to get to before the minimum premium is exceeded.  

As a side note, I have never had a landlord client ask for one of these.  These claims are not very common in the Midwest.

Hopefully this sheds some light on the cost to cover yourself from these tyepes of claims.