Landlord's Insurance - ridiculous quotes (US property, Canada resident)

[daverobev]

Hi,

just wondering if anyone has any ideas.

I just bought a place in Texas, roughly $30k. The quotes I have got back for insurance so far are $2k per year! Which is just nuts - our house in Canada costs less than $1k but that includes contents, plus the house is worth much more.

I've tried Allstate and Farmers. They said it was because I have no discounts... not sure how it works in the US. I can understand no claim discount or similar - but I was expecting the initial cost to be $600 per year... Looks like I made a boo-boo.

Any overseas investors here? Or anyone in the US know of a good flexible company that might have some better ideas?

Or should I just self insure.. I'm nervous about doing that because of liability, but jeepers. For $2k a year...! Insane!

Thanks!

[jba302]

Texas is consistently one of the highest HO insurance premiums in the country. I remember in 2008  some TX co-workers (insurance adjusters) told me that their mortgages were the same as their premiums. Apparently it has something to do with having exposure to an absurd amount of CAT risks (seriously: hurricanes, tornadoes, wind storms, hail, wildfires, and floods).


Self-insure is an option, you could get a personal umbrella policy that has a drop-down option so it would function as a primary on the homeowners component. You will have to talk to an adept personal lines agent as there are a lot of coverage options that I don't have working knowledge of.

[daverobev]

Ok thanks. I emailed Geico but I guess I'll call them in the morning.

[daverobev]

Oh my Good God.

GEICO? $7000.

Ho-Lee-Fuk.

[arebelspy]

Wow, that's all kinds of ridiculous.

My insurance on my Vegas properties (worth about 5x what that place is) averages $314 annually.

Can you get more specifics on why it's so high?  Is it the liability part?  Coverage for specific disasters?  Is it in a flood zone?  What?

Also the umbrella idea probably won't work - I know my umbrella requires primary insurance of certain amounts first.  But you can check into it.

[chicagomeg]

Part of your insurance rates is based on your credit score. I wonder if it's so high because you have no credit history in the US? Could you get an umbrella policy in Canada to cover the liability and self insure the structure?

[dragoncar]

Can you get a liability only quote? 

[daverobev]

Yes, the guy I've done most of the chatting with said it's because my insurance score is... well, he said it's "not bad, but not great" - basically the default, there is no history for me whatsoever.

Which is fine - I'd understand it *if* I was going to have anything at all to do with the risk! But I won't - I live several thousand kilometers away...

I will try liability only. I'm thinking I just won't insure... $107/month is the best so far, with $5k deductible.

I don't think Lubbock is particularly a disaster area (!). Far from the coast etc. I should've done my research better, ho hum.

[arebelspy]

Liability is important, attending court in a lawsuit when you are out of the country is.. tough, at best.  Better to have the insurance company's lawyers attend for you.

107/mo = 1,284 annually, yikes.  =/

You should definitely find out why it's so expensive.  If it's only just because of your insurance score, and how much it would cost for a US citizen with a decent credit score to get insurance on it (if it's still high, find out why - what exactly is the insurance company worried about covering on this property?).

If you used a Realtor, they should have helped you get that all set up so this issue came up before close of escrow.  Not necessarily, but I'd think a decent one would have mentioned it.

[daverobev]

Making some progress - $5k deductible plus 60% rebuild cost is getting down to $800 a year. Bearable, not optimal, but better!

[Daleth]

Did you buy the house as an LLC or any other type of business entity, as opposed to buying it in your own name? Reason I ask is landlord insurance, in my experience, was orders of magnitude more expensive when we owned as an LLC than when we owned as individuals.

In any case I second what Arebelspy said: you do NOT want to self-insure because all the money you think you're saving will be gone in one fell swoop if you get sued for so much as an itty-bitty slip-and-fall on the front sidewalk. You're thousands of miles away and will have to hire American lawyers (NOT CHEAP!!!) yourself, to do EVERYTHING for you. You'll be out $2000 in a matter of days, with a lot more money to spend on lawyers as time goes on. The one huge thing liability insurance does that everyone seems to forget is...

...wait for it...

GIVES YOU FREE LAWYERS if you get sued.

So yeah, in your shoes--that is, faced with a ridiculous quote for insurance--I would consider self-insuring FOR THE PROPERTY ITSELF, but ABSOLUTELY buying LIABILITY insurance. If your roof falls in, that's a repair cost out of your pocket. If your roof falls in and hurts someone, that's where your liability insurance and free lawyers come in.

[daverobev]

I hear you, Daleth.

Just found that the $800 quote doesn't include liability.. ugh!

[Daleth]

I hear you, Daleth.

Just found that the $800 quote doesn't include liability.. ugh!

Ack.

If you get nothing else, get liability. Nobody's going to sue you because your roof collapsed and your house is now worthless; that's your problem, it doesn't harm anyone else. They're only going to sue you if your roof collapses ON THEM or their car or something and thus causes them physical and/or financial harm (or your sidewalk gets icy or muddy and they slip, or your tenant's dog bites them, or you fail to fix an electrical problem and it causes a fire that hurts them, etc. etc.). Property insurance is only there to protect the owner (or bank, if you have a mortgage) from losing the value of the property due to some disaster. Liability insurance, in contrast, is there to protect you from lawsuits.

[tryan]

It may have to do with hail storm coverage ... perhaps you can ask for an exclusion.  A friend live in Keller TX and shared stories about replacing the roof every 5 years (at the insurers cost!) when every 10 is probably fine.

[daverobev]

Ok.. finally.. got a policy for ~$700, which comes with $300k liability... 'actual cash value' which is still twice the appraised value.. and a mere 2% deductible. I can deal with that.

Thanks for the help guys.

Geico wanted... $7,000. Most of the others started at $1800 or $2000. But that's at $120,000 replacement - the funny thing is that if you take 1% deductible on $120k it's still more than the 2% deductible I now have. But the house absolutely is not "worth" $120k.

One person told me liability-only would probably be $350, so.. I'm ok with what I've got. There may or may not be a cosmetic-waiver for the metal roof (which I'm fine with).

[SnackDog]

Which company?

[daverobev]

Alliance; not sure yet who it's underwritten by. But I had to go through several layers to get to these options; the default they offered was, I think, on par with the $2k quotes from elsewhere.

[daverobev]

Aand the underwriter declined due to no SSN.

Boy, this is harder than I thought.

[arebelspy]

You should definitely find out why it's so expensive.  If it's only just because of your insurance score, and how much it would cost for a US citizen with a decent credit score to get insurance on it (if it's still high, find out why - what exactly is the insurance company worried about covering on this property?).

[daverobev]

I'm asking them! One said yes, it's about right due to the number of perils and that it'd be cheaper if I had another house plus car insurance with them already.

(Namely hail, tornado, fire, flood, mexicans, liberals - sure are a lot of them to defend against in good ole' TX! ;)

I guess it's different with a condo (that others have) - the condo association must cover their own insurance.

Just frustrating at the speed of this - I've spoken to half a dozen different agents and at the end of the week I'm still uninsured. Not great!

[jba302]

You should definitely find out why it's so expensive.  If it's only just because of your insurance score, and how much it would cost for a US citizen with a decent credit score to get insurance on it (if it's still high, find out why - what exactly is the insurance company worried about covering on this property?).

Texas is consistently one of the highest HO insurance premiums in the country. I remember in 2008  some TX co-workers (insurance adjusters) told me that their mortgages were the same as their premiums. Apparently it has something to do with having exposure to an absurd amount of CAT risks (seriously: hurricanes, tornadoes, wind storms, hail, wildfires, and floods).

I wasn't kidding about this. It's like Thunderdome in Texas, except more guns.

[arebelspy]

I wasn't kidding about this. It's like Thunderdome in Texas, except more guns.

lol.  You may be right, I just looked at some of the numbers I have on some of the research I've been doing on Texas SFRs, and insurance is pretty expensive (~800/yr).  Property taxes even more so (3500, 4000, and 4500 on three properties I've dug into).

I'm pretty spoiled here in Vegas on those two counts.

Man, the Texas economy and jobs are good though.

[daverobev]

Well, thankfully I got it sorted by talking to the nice people at http://www.nreinsurance.com/ - this is 'their bag' (baby).

Just under $50 a month gets me $1mil liability and most other stuff, for actual cash value, and excluding flood and earthquake. Hopefully it'll do the trick! $5k deductible, though. Apparently it'll change a bit once the house is occupied.

[arebelspy]

Well, thankfully I got it sorted by talking to the nice people at http://www.nreinsurance.com/ - this is 'their bag' (baby).

Just under $50 a month gets me $1mil liability and most other stuff, for actual cash value, and excluding flood and earthquake. Hopefully it'll do the trick! $5k deductible, though. Apparently it'll change a bit once the house is occupied.

Nice.  Thanks for the info for future reference!