If You Own Many Properties, You Likely Have Too Many Insurance Policies

By Diane Ciaccia from

Most of the best real estate investors are opportunistic by nature. Whatever the catalyst—whether they spot an available property, identify an emerging market trend or come across a new source of financing— real estate investors will more often than not jump on a good deal. But while this business style often leads to varied portfolios, robust cash flow and increasing value, it just as frequently leaves opportunistic investors with a haphazard array of property insurance policies. The same problem exists for a variety of companies and organizations that own multiple properties. Not only are such collections of policies more complicated to manage, they frequently make risk mitigation for property owners much more expensive than necessary.

In Crystal & Company’s experience, most real estate investors or companies would be far better off managing their risk with a single master property insurance policy. The advantages of master policies are numerous, but flexibility may be the most significant. Consider that:

  • Master policies can cover multiple properties with myriad uses in far flung geographic locations.
  • Master policies can have different coverage limits (and varying deductibles) for different properties.
  • Master policies can include properties owned by multiple investors and/or accommodate differing legal ownership structures.
  • Master policies are especially useful to active investors, in that they allow for easy addition or removal of a property from coverage every time a property is bought or sold.

In addition to this multitude of benefits, a master property insurance policy only requires one annual renewal to deal with. This can save organizations and investors the hassle of multiple staggered renewals. For many, this reduction of “calendar clutter” might be the greatest advantage these policies have to offer.

To be sure, there are a handful of exceptions that could necessitate that an investor secure multiple insurance policies for their real estate portfolio. These special cases primarily involve certain types of property that are seen as especially high risk. For example, while many insurers decline altogether to issue policies for single-room occupancy apartment buildings, those that are willing to write this business require owners to take out a separate policy for each SRO building.

We’ve also had clients tell us that they prefer to continue using separate policies because the practice helps simplify their accounting, especially in regards to preparing financial statements for different investor groups. But in our experience that’s really not necessary. An experienced insurance broker can prepare individual invoices for different investor groups, allocating the premium for each property within a single master policy.

And, again, the savings that accrue from a master policy consolidation can be dramatic. One real estate company came to us recently with more than 50 separate policies. Every time this client purchased a new property, a new insurance policy was acquired as well, with the investor paying 30 to 40 cents per $100 of insured value. When we consolidated all these policies into a single master policy, the rate was 9 cents per $100.

Many investors and organizations are often unaware of the potential benefits that master policies have to offer. By combining separate policies into one, real estate investors of all stripes can bring simplicity to even the most complex, multi-location portfolios – saving them both time and money.


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