Do I require a home inspection in
order to obtain insurance for my investment property?
When purchasing a property, it is
helpful to secure insurance if you can provide the insurer with a
home inspection. This helps show the condition of the
property so that the insurance company can fairly asess a
premium. In most cases, if there is something wrong with the
property, the insurance company will allow you a grace period after
you acquire the property to correct the deficiencies found in the
What components of a home should I
look to avoid when purchasing a property?
There are numerous things you may
want to avoid when purchasing a property. More recently,
insurers are becoming more stringent on what investment properties
they choose to insure. If possible, try to avoid the
issues below if you are not prepared to remove them after
- Knob and tube electrical wiring
- Electrical wiring with a mix of
aluminum and copper.
- Galvanized plumbing.
- Heating, electrical, plumbing, and
roofing that has not been updated or maintained in the past 20
- Oil tanks.
Why should I insure my investment
property on a commercial form as opposed to a residential form?
Residential forms are designed to
insure properties in which the principal owners live. In some
cases, residential forms may have the following types of coverage
which are not ideal for investment properties;
- Limited water damage coverage.
- Named perils coverage : This means
that your property is only covered for the perils listed in
the policy. Everything else is excluded.
- Actual Cash Value : Some residential
forms provide coverage which includes the depreciation value of
your home. In the event of a loss, there may not be enough coverage
to rebuild and replace your property.
- Vandalism Coverage : In the event intentional damage is caused to your property by a tenant,
most, if not all, residential form policies will not provide coverage.
- Vacancy Coverage : Most residential
forms only offer 30 days of vacancy coverage, and often exclude basic forms of coverage when your property is vacant. Commercial form policies look to address these holes in
coverage so that you can be more confident you are properly
Why is my property sometimes insured
for more or less than what I paid for it?
In most case, you will buy a
property at its fair market value, which takes into consideration
the condition of any building on the property, the area in which it
is located, its proximity to schools, restaurants, grocery stores,
and the size of the land that it is built on. When insuring a
property, you should only be concerned about how much it would cost
to rebuild it.
Is there a cap on the number of
properties that I can insure through the HUB Real Estate Investment Insurance program?
There is no cap on the number of properties with the HUB program.
We also do not require that HUB handle the insurance on your
principle residence in order to handle the insurance on your