Seeking Insurance for Investment Property
Hi everyone,
I’m in the process of purchasing a property that I plan to use as both a home and a business location. I’m looking for insurance options—specifically, home or business insurance.
This property will serve as an investment, and I intend to move my business operations there. I’m considering a 30-year loan, and the bank requires an insurance quote as part of the process.
The house will be zoned for commercial use, but it does have some outdated electrical systems that I plan to update immediately upon purchase. The main roof is relatively new, but the patio roofs could use some work.
I’ve reached out to several insurance companies, and they’ve all mentioned that they won’t insure the property unless I plan to occupy it within 30 days. Additionally, they flag issues concerning the electrical updates in their assessments.
Given the situation, it seems I may need to explore commercial insurance options. I’m concerned that this could complicate my loan process. If anyone has advice or suggestions on how to navigate this, I would greatly appreciate it. I’m feeling a bit lost at the moment. Thank you!
It sounds like you’re in a bit of a tricky situation, but there are definitely steps you can take to secure the insurance you need. Here are some suggestions:
Commercial Property Insurance: Since you are planning to use the house for business, commercial property insurance may indeed be the best option for you. This type of insurance is designed for properties used for business purposes and can provide coverage for things like liability, property damage, and more.
Consult an Insurance Broker: Reach out to an insurance broker who specializes in commercial properties. They can help you navigate your options and find a policy that fits your situation. Brokers often have access to more varied options than individual insurance companies.
Provide a Plan for Updates: When speaking with insurance companies, clearly outline your plans to update the electrical system and any other improvements you intend to make. Showing that you’re proactive about the property’s safety and condition may help in getting a quote.
Vacancy Insurance: Since insurance companies are flagging you for not occupying the property, ask about “vacancy coverage” or “builder’s risk insurance.” This could provide coverage while you’re making necessary updates before moving in.
Get Everything in Writing: If an insurer provides you with terms that need to be met (like an electrical update), get those in writing. This way, you can demonstrate to your bank that you’re taking the necessary steps to meet their insurance requirements.
Discuss with Your Lender: Keep your bank in the loop about your situation. They may have specific insurance partners or recommendations who can work with your unique scenario.
Document Everything: Take photos and keep detailed records of the current condition of the property and any renovations you plan to make. This may help with the insurance process.
Consider Other Options: If commercial insurance doesn’t seem feasible, you could also inquire about residential insurance for a rental property. However, be sure to confirm that this meets your lender’s requirements.
Overall, being transparent about your situation and demonstrating your commitment to making improvements may help you in securing the coverage you need! Good luck!