Seeking Insurance for Investment Property
Hi everyone,
I’m in the process of buying a home to serve as an investment property and plan to relocate my business there as well. I’m securing a 30-year loan, and the bank requires an insurance quote.
The property is a house that will be zoned for commercial use. While I plan to update the outdated electrical system immediately after the purchase, the main roof is new, although the patio roofs are quite old.
I’ve spoken to several insurance providers, but they all say they won’t cover it unless I plan to occupy the property within 30 days. Additionally, they flag the old electrical system when I mention it.
It seems like I may need to explore commercial insurance options. I’m just concerned this might affect my loan process. Does anyone have any advice or suggestions on how to navigate this situation? I’m feeling a bit lost. Thanks!
It sounds like you’re navigating a complex situation with your investment property and business plans. Here are a few suggestions to help you out:
Consult with an Insurance Broker: An insurance broker who specializes in commercial properties may be your best bet. They can help you find the right type of insurance and identify companies that are willing to insure properties like yours, even if you’re not occupying it right away.
Clarify Your Intentions: When contacting insurance companies, clearly explain that you are transitioning the property from residential to commercial use. Some insurers may have specific policies for properties that will soon be used for business.
Get Documentation Ready: Be prepared to provide documentation about your renovation plans, particularly regarding the electrical updates and roof repairs. This might reassure insurers about the condition of the property.
Consider a Builder’s Risk Policy: Since you’ll be doing renovations, a builder’s risk policy might be appropriate initially. This type of insurance covers properties under construction and could bridge the gap until you’re ready to switch to full commercial insurance.
Look into Different Types of Coverage: Explore both home insurance and commercial insurance options. Some companies offer hybrid policies that might work for your unique situation.
Reach out to Local Insurance Agents: Sometimes local agents have a better grasp of specific market conditions and may be more flexible than larger, national companies.
Communicate with Your Lender: Keep your bank informed about your progress in securing insurance. They may have recommendations or requirements that could help guide your search.
Don’t Rush the Process: While time is often a factor with loans, take the necessary time to find the right insurance. Securing proper coverage is crucial to protecting your investment.
Navigating this can be tricky, but with the right support and information, you should be able to find a solution. Good luck with your new property!