Duplexes and Home Insurance

A homeowner called me last week to discuss home insurance on her Dallas area duplex. It was coming up for renewal and she wanted to confirm she was not over paying for her home insurance. I was delighted to review her current rate and advise her on her coverage. Based on that conversation, let’s review insurance considerations for a duplex.

There are many ways to write home insurance on a duplex, however, it hinges on two key issues; do you own one or both sides and who lives there. Let’s look at a couple of examples of how home insurance companies approach this.

One Side Owner Occupied: This is the easiest of all the scenarios. When a person owns only one side lives in it as their primary residence then we quote a standard home insurance policy on just their side. The policy covers only their half of the duplex including their portion of the roof, exterior walls, interior finish out, and their personal property or contents. Whomever owns the other half of the duplex is responsible for covering their half.

One Side Tenant Occupied: When the owner only owns one side and rents it to a tenant, then we write a rental property policy for their half of the duplex. The policy covers only the half they own including their portion of the roof, exterior walls and interior finish out. Personal property is usually not included unless the owner is providing appliances such as a washer and dryer for the tenant. The tenant is responsible for protecting their personal property with a renter’s policy.

Both Sides Tenant Occupied: Like the one side tenant occupied case, a rental property policy is written on both sides of the duplex with each tenant needing a renter’s policy to cover their personal property.

Both Sides Owned Mixed Occupancy: This was the case of the person who called me last week. She owns both sides, lives in one side and rents out the other side to a tenant. Home insurance companies approach this in a couple of different ways.

  • Write a primary home policy over both sides, however, only the owner’s personal property is covered under the policy. This approach may also be used if the second half is occupied by an immediate family member such as a parent or adult child. The family member, like a tenant, will still need a renter’s policy to protect their personal property.
  • Write a primary home policy over the owner occupied side and a rental property policy over the tenant occupied side.
  • One company writes a primary rental property policy over both sides and covers the owner’s personal property with a renter’s policy.

After reviewing my options, I informed the person who called me she had an excellent rate. However, I was concerned she had some gaps in her coverage I would have addressed differently and made three suggestions she should address with her current agent. I believe it’s important to point out gaps in coverage when I see them. What do you think? Share your comments, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

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