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Getting The Best Value on Rental Property Insurance

- Thursday, April 12, 2018
TriState Business Insurance - How to Get Best Value for Rental Home Insurance

It's moving season once again.  This is the time of year when the military moves the majority of their people, people change jobs, people retire to their dream homes, or move for a host of other reasons.  Many will retain their present home as a rental as they move off to another place. This puts many homeowners in their first-ever role as landlords which of course introduces new and unique home insurance considerations and decisions.  Your friends here at TriState Insurance (serving VA, MD, and DC) offer this blog post who either currently owns rental property or soon will own rental property and will benefit from our professional advice regarding how to get the best value for rental property insurance throughout VA, MD, and DC.  

Insurance for a rental property is different than insurance for a single family primary or secondary home, primarily because a rental is exposed to inherently different risks than a primary residence. For starters, the owner does not reside on the property so does not have an eye on the home on a day-to-day basis. Slip & falls, vandalism and theft are far more likely to occur at a non-owner occupied location versus those where the homeowner is regularly present.

Exposure to frivolous lawsuits is infinitely higher for a rental property versus a primary property. Think of a 3-unit rental property owned by the same landlord for 30 years. If the average tenant stays in a unit for three years, the landlord will have had 30 different tenants pass through his or her property. Compare this headcount to a single family homeowner who occupies one primary location for that same 30 years and you can do the math on the potential for claims. Here are some of the factors that play a role in obtaining insurance for a rental property, and the pricing for that coverage from the insurance carrier's standpoint:

  • Year Built & Updates - newer houses will be most favorable, obviously. Older homes with full system updates (roof, electrical, plumbing and heating) completed in the last 20 years are also favorable. Older homes with little to no updates, or incomplete update information, are less attractive.
  • Claims History - properties with little to no claims in the past six years will be more favorable. Properties and/or owners with frequent or large claims within the past six years will face limited options. The owner's personal claims history on ALL owned properties will be considered in the underwriting process.
  • Location - the rental property's city and neighborhood play a factor in pricing. Certain areas of towns, cities and regions have higher crime rates than others, and you can believe that insurance companies do indeed factor in that crime data.

If a rental property checks all the right boxes with respect to those items above, there should be multiple carriers competing to write the insurance. This will results in better coverage and better pricing. If the rental property fails to check all the right boxes there may be a limited number of carriers offering policies, thus the potential for limited coverage at a higher cost.

It is important to work with an independent insurance agent who understands how the rating factors work, as well as the weight each insurance company places on said factors. Call us, you independent insurance professionals here at TriState Insurance to discuss any and all of your insurance concerns and needs.