I have received several emails and calls over the last few weeks about home insurance for a duplex, so I thought this would be an excellent time to revisit this. Insuring a duplex can be the same as writing a home insurance policy for a single family home and it can be very different.
What makes insurance for a duplex very different is there are two homes under one roof, each with their own kitchen, bath rooms, living areas, and bed rooms. How a duplex is insured depends on what the buyer’s intentions are for the property.
There are three questions I ask anyone buying a duplex which help me determine how to insure one.
- Are they buying one side or both sides?
- If they are only buying one side, will it be their primary home or a rental property?
- If they are buying both sides will they live in one and rent out the other, of will both sides become rental property?
One Side: If the buyer is purchasing only one side and it will be their primary home, then a home insurance policy is written for their half of the duplex. The replacement cost (see https://wiseinsurancegroup.com/home-insurance-replacement-cost-actual-cash-value/) is determined based only on the square footage and finish out of their half. Coverage for contents, detached structures, medical coverage, and personal liability are covered in the same way a single family home insurance policy is written.
If the half is being purchased as rental property, then a landlord policy is written. Landlord policies cover only the premises and may include personal liability for the owner, but there is no coverage for the tenant’s contents. The tenant will need to purchase renter’s insurance.
Both Sides: If the buyer is purchasing both sides and one side will be their primary home, then the question to answer is who will live in the other half. If it’s an immediate family member such as a parent, sibling, or adult children then most insurance companies will write a single home policy for both sides.
In this case, the replacement cost is determined using the total square footage of both halves and include in the computation both kitchens, the total number of bath rooms, bed rooms and living areas (see https://wiseinsurancegroup.com/home-insurance-replacement-cost-factors/).
If the other half will be a rental property, some carriers may write a single policy on both sides while others may write a single family policy on the owner occupied half and a landlord policy on the tenant occupied half. Which approach is taken varies by carrier.
In the case where a single home insurance policy is written, the contents coverage applies only to the owner occupied side even if the property coverage applies to both halves. The tenant still needs to purchase a renter’s insurance policy in order to have coverage for their personal property.
If the owner is purchasing both sides and they will be occupied by tenants, then most insurance companies will write a landlord policy on the total structure. I have seen a couple of carriers require a separate landlord policy be written for each side as they view each side as a separate rental property.
Are you thinking about buying a duplex or already own one? Share your experience, comments, and questions with me on my Facebook, Google +, or LinkedIn pages. I’d love to hear from you!