Is Your Landlord Insurance Policy Eating Away at your Profits?

Posted on: March 13, 2010

Categories: Other Articles, Things To Consider

Author: buyfixandprofit

insurance 300x225 Is Your Landlord Insurance Policy Eating Away at your Profits?

Shop your Landlord Insurance Rates

When was the last time you shopped around for quotes on your landlord policies?  Not often?  Not once since getting your policy?  I have personally seen insurance costs all over the board over the past 10 years depending on the financial stability of the company usually.  It costs you nothing to have an insurance broker quote all of your policies to see how competitive your current rates are.  If you have several properties in you rental portfolio it can be real easy for you to realize significant savings.

Is there Insurance Broker Loyalty?

I was using the same reliable insurance broker for the past 6 years with no issues to note.  She was fast, thorough, knowledgeable and always returned my phone calls or e-mails the same day. So why would I switch when finding a competent real estate professional nowadays seems to be harder than ever?  The bottom line was the extra money in my pocket at the end of the year.

What do you think?  Was it unfair or wise of me to just drop my established broker after many years of outstanding service?

What I Evaluated before Switching

Well I didn’t change insurance brokers blindly.  Here is what I compared and the results that convinced me to switch.  Tell me if you would have done the same thing.

  • We went line item by line item down each landlord insurance policy and made sure that at a minimum I was going to receive the same coverage on each property I own. As it turned out, I received BETTER coverage and half of my policies while reducing my yearly premiums.   The total savings turned out to be $3,400 per year!
  • Then the insurance broker pointed out that this insurance company he wanted to switch me to had a sewer back-up rider that could be added very cheaply to each of my policies and that I should really consider this option given where my rental properties are located.  That suggestion alone just proved to me that this guy knew what he was talking about.  My old company didn’t offer this option and I actually experienced city sewer back-ups twice in the past year on two of my rentals and had to pay for water heater, furnace, and basement bathroom repairs out of my own pocket.
  • My new insurance broker then suggested I really consider adding an umbrella liability policy as part of my wealth preservation plan.  He explained to me the different scenarios where a real estate investor’s corporate shield (an LLC) has been pierced in the past and the investor himself suffered significant losses.  After doing some research on my own, I realized that he was right and many other investors suggested the same.  So once again, my new broker had proven his knowledge to me when it came to dealing with rental property insurance needs.
  • My new insurance broker was also a landlord himself.  He had his own small portfolio of rental houses and this was exactly how he insured his own properties.
  • The insurance quotes being offered to me were from one of the big name insurers in good financial health.
  • Finally, this independent insurance broker’s office has been around in my area for 47 years and they have a strong client base.

We discussed many other aspects of a good landlord insurance policy that I won’t get into that here.  For a brief overview on the different aspects of a proper landlords policy check out the following article:

http://www.biggerpockets.com/articles/606

Reevaluate your property expenses on a yearly basis and don’t be afraid to shop around.  Relationships are important, but if you can find better deals on the same product don’t be afraid to switch.

What’s your opinion? Let me know.

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