I have a 'package deal' with my property insurance company that includes my rental properties and car for a discount, which is something that I believe is somewhat common.

So they get a hefty check from me every six months as I pay biannually. They've been getting it 5 years now, and I've never filed a claim yet. Probably never will.

I'm not rich in fact currently looking for second employ-- I need a new roof and new back fence, trees taken out so those are waiting on that.

So I have to set aside money monthly all year to cover the big property insurance as well as the property tax bills which are going up, up and up. In short I'm trying to cut my bills.

So, looking at my property insurance.

Now I've never filed a claim on my house (25+ years) either. My issue is that when I look at my policy they have my rentals and house valued at more than twice what their current market rate is- if they were sold today.

Now, I'm no insurance guru--- but I'm smart enough at least to know insuring a house that has a market value of $150,000 (there are websites all over that can tell you this) for $300,000 looks like I'm being charged a lot higher premiums for the same amount of insurance.

Why? Because if there ever were damages to the property, you know they're definitely only going to pay the damages and thats it, not cut me a check for the full amount right.

So if the house was totaled, what's the difference between getting the market resale value, and simply selling the property on any other day? In either case you're going to leave and go somewhere else, nobody is going to pay to rebuild a rental or house from the ground up the cost is astronomical to do that.

SO. I brought this up with my insurance company, asking if they could please just lower my coverage amounts closer to the market resale value is as I'm trying to cut my costs and would not like to carry so much insurance.

That was Friday. They've been "in meetings" ever since about my "account".

I understand they've come to depend on this big chunk of money they're getting and by no means want to lower it a cent---- and are looking for ways to tell me its not possible right. That's definitely the way things look by this strange delay, and what I expect to hear when I finally get the phone call.

Just wondering what other people have done and your experiences.

So, so,so, so,so,so,

Two thoughts:

1) If your policy is replacement cost, try going instead with "Actual Cash Value." The policy you are likely paying for is the cost to rebuild from scratch, and we all know that the cost to build is usually almost higher than the current fair market value. Be aware: ACV policies usually contain a depreciation payout, but what I've found on the several claims I've filed is if you bump the insured value $10-$20K above market it costs very little more but pays out pretty well.

2) Increase your deductible. I've found $1,000 deductible per $100,000 of coverage seems to be the sweet spot. Any lower and my premiums are too high. Any higher and the savings isn't worth the added risk I'm accepting.

Yeah, insurance is nuts these days. So are building costs, which is why the insurance is nuts.

Moral of the story: forget investing in houses. Buy an insurance agency instead.

Same as what NE and Sid said.

Also, whois your agent?

If I call mine, they figure it out right then and give me the options.

Maybe you need to shop agents as well as insurance companies.

Hindsight is 20/20 of course, but I look back at the 5-6 years of insurance payments I made on my rentals, and if I had just put all that money into a bank account instead.... I would have a huge kitty of money to cover any potential damages right, and more every year. And I would never deny my claim. No need to pay the salaries of insurance execs.

Is there any credence at all to the stuffed mattress insurance policy for rentals?

>> as it is if there was a total loss of the building you would get the amount that sounds high, if you have them lower the amount and you have a partial loss you will be getting less than expected because you will be considered co insured ->>

And yet when I get quotes from other insurance companies, they literally decide my premium based on the amount the property is valued.

So why if a buildings cash value is $150,000, and you insure it for exactly that, would they not pay the full damages to repair say a $30,000 fire? Is that not fixing 1/5 of the cash value of the property and making it whole again.

Forgive my simple math, but if that isn't the case it sure looks like you're dagnned if you do or don't.

Its like the rules are designed to make them money, not protect you from damage!

I sound like my pessimist father but somehow I just imagine after all these smokeroom meetings they are having, they will offer me a change where I save a little bit of money but they get a better deal.

Or they will simply say, "We can lower your premium, but this awful thing you don't want will happen. Its your choice..."

I will soon find out!

If they ever stop having meetings about it.

Why can't insurance companies just deal with people honestly?

They'd be amazed at how much more business they get!

Is there any credence at all to the stuffed mattress insurance policy for rentals?

Knew a LL that had the mattress policy and May 22, 2011 his policy failed. More than 40 years of LL experience and 70 doors. He was charter member of the local LL association.

Raise your insurance deductible to $2,500 or $5,000 cash value

"Its like the rules are designed to make them money, not protect you from damage!"

Duplexer

What type of policy are you buying? It sounds like you are purchasing a replacement or a functional replacement policy. I once had a place with a market value of 1.7 Million, a functional replacement cost of 4 million and a replacement cost of over 7 million. Do you think the cost of insurance differs between those three numbers?

So you can always purchase a cash policy for the estimated market value.

Also within each type of policy, there are three different grades of policies. If you are looking for lots of fancy add on's those will cost you. But since you are filing claims a basic Cash Value policy is what I would recommend.

Are you headed to the convention? I know you have struggled in the past, I want to help you get it so your rentals are working for you. Currently you are working for them.

Replacement costs are higher than fair market value in many markets. Insurance is to rebuild not purchase the property.