I am considering dropping all insurance myself. Spoke to my State Farm agent this morning and they are willing to sell me just the liability policy for $500K per unit at $54 a month/unit. I have the highest deductible possible still the annual costs keep going up and up. I do not make small claims and have had insurance only for a catastrophic loss but still keep creeping up. I have to keep insurance on the financed buildings due to bank regulations. Going self-insured is also a plan. Big companies like U-haul are self insured. If you have been doing this business for as long and I have (20 years plus). You know how much you have paid in premiums and what losses you have had.

I'd like to know how many of you are self-insured and what do you think about.

I've done liability only on a couple of places. Usually, they were older and low value. One I dropped insurance with the bank's OK once the loan was down to the value of the lot without a structure. We did that for a couple of years before tearing it down.

For me, it depends on what it costs to insure compared to how much I would be out. If I own it free and clear and it is older, I'll self insure since I would have no problem borrowing to rebuild after a fire.

The problem you face is the risk of a catastrophic loss. My combined premiums on all units is less than the value of 1 house... so basically I'd have to go over 20 years without a claim to "break even" on the additional risk I was assuming.

I'm in year 12 now, and I've already had one loss due to fire. The proceeds I received paid back my insurance premiums for the first 5-6 years.

How spread out are your units? I live in the Mid-West and we get tornadoes. One EF-5 could take out everything I own in a single swoop. I can't afford to "go naked."

If all your units are in one apartment complex, a fire could wipe you everything.

Self-Insurance Story! Please read.

1) A bank foreclosed on a multifamily apartment building and no one wanted to bid at the foreclosure auction. So the property was then owned by the bank/mortgage holder.

2) For the next two years the bank was not liable to manage the property or keep it up to code. Things went unfixed. Tenants moved out and gangs moved in. No one cared!

3) As a landlord/contractor, the Bank/Owner and the City Housing Department wanted to get "someone" to turn the property around.

4) I was offered the property for a "cheep cash price" and was promised I had 4 to 6 months to turn things around.

5) I purchased the property with a 50% down payment and securing a basic "Fire/Liability" policy.

6) The day after my purchased I was delivered by hand at the property two years worth of "Violations" by the various City Departments.

A) My mortgage was called in

B) My insurance was cancelled

C) The property was "Red Tagged" and the remaining tenants had to move out.

The City wanted me to pay all units around $,5000 in relocation costs.

At this point my LIABILITY was huge. Because I had no insurance and the load was with a Federally Insured Bank, I was looking at many "Takers" that wanted my property.

BUT since I was a contractor that "had many other types of Insurance" AND "I WAS ALSO SELF INSURED WITH THE STATE" (Having 1/4 million dollars in a trust account naming the State as beneficiary in case of specific judgments. With out the City, State, Bank and others securing a Judgement in Court, after a trial, I was shielded from further punitive actions by "government".

Within weeks the State then changed it policy about Self Insurance. Now I could no longer just set up a special trust account, I had to give the money ($250,000) to the state to be self insured.

I then got caught a few months later operation under self insurance again. They wanted to throw the book at me. But now I put the $250,000 in State Bonds and had my broker set it up naming the State in trust. Again the State Insurance People then had to rule against me again....

So during this came of cat and mouse I was able to fix up my property and get it insured, meeting all codes and rules, laws and "made up stuff" that came my way.

It is not that easy to be self insured when you:

I originally has commercial company out of GA but switched to State Farm due to the outrageous rates.

I really like SF. Their rates are very reasonable but then rates are regional so your area might well be higher. i know when we moved here from Philly we thought the insurance quotes were quarterly rates.

I have had two major claims with SF both due to water damage. It seems builders here think that overflow pans and hot water heaters belong in the attic.

SF handled it quickly with no disputes Full replacement cost and lost rent. The only insurance I like better is USAA but they outsource investment properties to a company that won't handle more than 10 and are much more expensive than SF.