why won't the insurance companies insure our Malibu co-op if it is tenant occupied?

Question

We are having trouble finding a company that will give us 2.5 million for our 4 unit building (it is techanilly a corporation) if any of the units are rented out. Most of rent them out.

Answer 1

You need a commercial policy, if the building is owned by a corporation. You're probably trying to find it under a dwelling or homeowners policy. Either that, or your tenants are high risk - weekly turnover, students, etc. If you have long term leases, you shouldn't have any trouble (with non-students) getting a commercial policy.

Don't YOU go looking for a company to insure this, go to a local, independent agent to find a carrier.

And, if the problem is the LIMIT of coverage, well, you're going to have to adjust this. Keep in mind, if you're over-insuring based on the cost to rebuild, you do NOT get the policy limit - you get the LESSER OF the policy limit, or cost to rebuild. And if you choose not to rebuild, likely the policy is going to revert to ACTUAL CASH VALUE. Based on your limit, it looks like your building is around 8,000 square feet of living space, right? Otherwise, it's HIGHLY overinsured.

Answer 2

Are you, perhaps, over insuring the property ? Do remember that a sizeable portion of the real estate values in Malibu translate to the ground upon which the structure sits. Unless this is a very upscale structure, you may be asking for more insurance than it will cost to replace the building in the event of a loss.

There's no point in insuring land. It will still be there after the building is gone.

Answer 3

1. Insurers prefer that the owner occupy at least one of the units, thinking that tenants are less responsible and less motivated to be careful.

2. 2.5 million is a lot.

But this is what your insurance agent is for - keep pestering him or her.

Answer 4

try talking to an agency that specializes in commercial properties