Strategies to Reduce Property Insurance Premiums 

Posted By: Eve Valencia ICOR Blog & News,

In the last few years, property insurance premiums have been on people's minds with the large increases from different carriers. Most of the factors causing these increases are out of the insured's control, but there are a few things they could do to pay less for their investment property insurance. We will discuss some of these strategies you can use to reduce the premium for your rental property's insurance.

1. Working with an insurance agent who understands the priorities of a real estate investor is essential. The ideal agent or broker is an important part of any business transaction. It begins with the quoting process, necessary coverage, adding discounts, and choosing flexible payment plans. 

2. Reviewing your rental property's construction materials could help you lower your insurance premium. In Colorado, replacing and updating your roof with one that is more impact resistant to wind and hail could open the door to a significant discount. If you recently made improvements to your rental properties, be sure to contact your insurance agent to see if you qualify for any rate reductions.

3. Investing in a risk prevention system for floods or fires. A risk monitoring system could help with preventing and minimizing future losses for your single-family or multifamily rental. Water or gas leak detection systems and freezing pipe sensors are all a great strategy to make your rental property safer and more profitable. Your insurance underwriters would like to know about these proactive property management practices.

4. Raise your deductible to reduce your insurance premium. Most property insurance deductibles are above $1,000 for general losses but higher than $2,500 for wind and hail claims. When choosing your rental property’s insurance deductible, you will need to look at your budget and consider two options: A) Lower insurance premium but higher out of pocket repairs if home is damaged. Or B) Consider a higher insurance rate but a lower deductible when there is a hail claim.

5. Consolidating your rental insurance policies into one master policy. Multiple locations will benefit to multiple discounts, which will lower your insurance cost overall. Each scheduled location will have the same renewal dates and general coverage to simplify the property insurance process.

6. Skip small claims. It may be tempting to file a claim with your insurer even when something minor happens. However, you may be better off overall if you pay out of pocket for these smaller expenses. There are some carriers that offer discounts if you remain claim-free for a certain period, usually a few years.

7. Remove Attractive Nuisance. It is not worth the risk and the cost to have it included with your property.

Insurance is more complicated with all the several weather disasters within the last 5 years. Insurance agents must be more creative in how to bring new business and retain their current policy holders. Insureds must accept the new insurance rules, prepare their budget and work with an agent who understands their priorities. If there are any questions about the above five strategies, please do not hesitate to contact me.