THE HOMEOWNER INSURANCE SCARE!

[#1investor]

AS A BEGINNING INVESTOR, WHAT SHOULD I LOOK FOR IN SHOPPING FOR HOMEOWNER'S INSURANCE? (SPECIAL CLAUSES, UNDERLYING STATEMENTS, ETC...)

[Rich_in_CT]

First thing.....take off the caps.....

Will the property be owner occupied?

[AzonPM]

I hate insurance, I go for the cheapest.  

[#1investor]

non owner occupied properties

[gsuidiot]

Buying insurance only based on the price is ludacris.  You're trying to manage your risk from partial/total loss of an asset(s).  

One of the most important things commonly overlooked in today's market is the insurance to value calculation of a building.  Be sure you are insured at 100%, or 90% if you're electing to go with a co-insurance clause.  A partial loss could cause a major headache when the insurance company denies full payment of the claim because you were only paying premiums on half of the building value.  It does and will happen.  The hurricanes of 2005 sent building costs through the roof and most companies didn't inflate their renewal calcs to keep up with the additional costs.  Long story short...it's a soft market in insurance and they're doing stupid things to keep business.

Sewer and drain coverage is a biggie.  Be sure it's on the quote.  liability varies...most companies use $1mm in limits and that will usually suffice on a 1-4 family building.  As you go higher, a life loss could cost excess $1mm...be sure to purchase the umbrella.  

Pay attention to this last suggestion.  Do not buy insurance from a website.  Find a local agent that you can trust and have him find your coverage.  They are licensed to address your risk needs and carry E&O coverage if something is missed.  If you purchase from a website, you carry the burden.  Their cost is included in the premium in the form of a commission and usually the product is the same price as going direct to a company.

Happy Risk Management.

G

[AzonPM]

In MA you make a claim, no matter what, they cancel you!  They don't care if you're lucky they will just warn you and give you another chance.

I just called my agent about putting a claim in for my 6 family, they said if I do I'll most likely get canceled or my rates would increase dramatically.  

Not to mention my premium is already over 6K a year.  After reading the policy again the more detail, I pretty much have crap for insurance.  When I got it my agent said it was the best plan you could get in MA.  What a joke!

[kdhastedt]

That's because Massachusetts is a semi-socialist state..."The People's Republic of Massachusetts" (I'm originally from Western Mass...)

Keith

[Bluemoon06]

Buying insurance only based on the price is ludacris.  You're trying to manage your risk from partial/total loss of an asset(s).  

What I do is get the same policy for each of my houses.  I get structure only at my mortgage rate not the home value, I get income protection (which gives me up to 6 months of the missed rent at $1000/month in case of a covered event) and I get the same deductible for each house.  This type of policy is a state of Texas thing legislated for landlords.  I then shop strictly on price.  I get this type of insurance for $450/year to $650/year.

Whatever you use as your criteria, don't let an agent offer to quote you any other features because that makes comparing one quote to another too difficult.  (is the extra paint bubbling clause from company #1 equal to the hungry marsupial clause from company #2)