Why small multifamily properties need a closer look
A two-, three- or four-unit building can create different insurance questions than a detached rental house. More units can mean more tenants, kitchens, plumbing fixtures and liability exposure within one structure. Insurers may also distinguish between an owner-occupied property and a building where every unit is rented.
Owner occupied or fully tenant occupied?
Tell the agent whether you live in one unit. A duplex with the owner in one side and a tenant in the other is not the same exposure as a fourplex rented entirely to tenants. Occupancy should be described accurately when coverage is requested and updated if the use later changes.
What insurers may ask
Be ready with the property address, year built, construction type, square footage, number of units, roof replacement year, updates to plumbing and electrical systems, heating information, occupancy, claims history and desired building amount. Insurers may request additional details about renovations, pools, detached structures or other property features.
Building coverage and landlord liability are different
Building coverage addresses covered damage to the insured structure subject to the policy terms. Liability coverage addresses certain claims alleging bodily injury or property damage for which the insured is legally responsible. Neither should be assumed to cover every loss, and the tenants' personal belongings generally require their own renters coverage.
Loss of rents can matter more with several units
When a covered loss makes part or all of a small multifamily building uninhabitable, lost rental income can become significant. Review how the proposed policy handles loss of rents or rental value, the applicable limit or time period, and the conditions that trigger coverage.
Do not assume every fourplex belongs on the same form
Carrier rules vary. Property use, ownership, building characteristics and underwriting appetite can affect whether a risk is considered under a dwelling, landlord, package or other program. The useful comparison is the actual coverage offered, not simply the label attached to the policy.
Insuring a Texas duplex, triplex or fourplex?
Insurance Plus can review available landlord and small multifamily options for qualifying Texas properties.