Rooming House Insurance
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Hi,
Does anyone know of a insurance company that will cover rooming house? Please help.
Me & my business partner bought a 5 bedroom house in Melbourne and converted it into rooming house. We are also converting the second lounge and the dining room into bedrooms, such that there will be 7 bedrooms.
It is making our IP into +cash flow.
Now the challenge is with the insurance. We are struggling to find an insurer who will insure a rooming house.
Hi,
Might be worth ringing an insurance broker who may have access to more info. Might save you the phone calls to each insurance co. Also might be worth ringing a local property manager or 2 and asking them if they know of anyone, if they hand management of something similar they may know.
D
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Hi Dwolfe,
Thanks for the suggestion. Eventually ran Financial services Ombudsman and they gave me the numbers of two brokers. Called one of them, and they are in the process of giving a quote. But indication are the premium would in the range of $8000-$10,000 per annum, which is exhorbitant and takes out all the charm out of converting a property into student accomodation for positive cash flow purposes...
Thanks once again.
Hi,
Just wondering how you would define a rooming house... if you have a house that has 7 rooms, and you get the 7 tenants to all sign the lease agreement would that be considered as a rooming house ?
Hi Andlim,
As per the Council Regulations & Consumer Affairs Victoria (CAV), a house with 4 or more unrelated persons where individual agreement exists is classified as rooming house and is required to be registerd. There is a brochure of www.consumer.vic.gov.au on rooming house.
If all 7 tenants sign a joint lease, then its not classified as Rooming house, because they don't have a separate agreements.
Cheers
Hi
By the look of your user name you are a builder so I take it you understand the build regulations on this type of house, as in more than 5 individual tennants its a 1b, if council has approved this you should be able to show it to a insurer and all should be fine. I have student acc in Adelaide and have policies with CGU and they were told what type of house it is. If it is not council approved or set up as a 1b don't worry about insurance as they would not pay you out once they found out anyway
Have fun
Barry
Hi Barry,
I'm only an aspiring builder and will be commencing a six unit development at the back of this Rooming house. So honestly, I'm not aware of the regulations. But taking a hint from your comment, I looked up on google for Class 1b building and understood that its for small guesthouse, boarding house or similar housing.
We recently complied with the council requirements to be registered as a rooming house.
So do we just clearly tell the insurer that it is a Registered Rooming House and hopefully insurers like CGU should accept it.
I'm getting quotes from Insurance brokers, but they are in the region of $8000-$10,000/-premium per annum.
Thanks a lot for your help.
WOW! Yeah wont be looking at that option. It would eat all of your profit up. Thanks for the info. Interesting to see that if they were all on the lease it is not technically a rooming house. Wondering how that changes the equation for insurance. We only have 3 students in one of ours but it is good to know in future just in case a girlfriend moves in ;) Everyone on the lease or everyone out.
D
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Bob The Builder
The 1b normally covers up to 13 people and has regulations like fire escape door and door sets, interconnected smoke alarms, I have 11, lights that come on at the exits with the alarms. My council allowed 10 in my house based in size. Its a bit of work to set up but not to much, anything above 13 then it gets more complicated.
My broker is going over my insurance again hope not to open a can of worms.
Barry
Hi Barry,
We will have 17 in total. Hope the classification for us comes out as 1b.
Based on your comments, it seems the insurance companies don't have clarity. They should be asking clearing whether your property classification is 1b or Class 3. If Class 3, then they can decline, and if class 1b, then cover it as CGU has done for you. Your explanation makes perfect sense.
It would be of great help to this amateur builder, if you could share the name of your insurance broker.
Cheers,
How much are they paying (or may pay) p/w? What are the over heads on this. 10 x $110 p/w? So it would basically cost you 2 1/2 mths rent to cover the insurance....... How much are you looking at seeing in your pocket a year out of this? Just curious.
D
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You are in for a class 3, so fire hose reels, exit signs, etc, 1b is 13 or less
My broker said that he has insured a old church over here converted to student acc so it is commercial not residential and was under 2,000, he ran me through all the reasons why they can etc, so will pm his details to you.
To Mr Wolf, I have 8 rooms, return 1,100 p/w, my average investment cost me 100 p/w to hold, rates, insurance, management etc, this one is 300 p/w elec/gas/water/internet
Barry
Couldnot pm you, Ross @ TCB 08 83762299
Hi Barry,
Thanks a lot for sharing the contact details. I called Ross and he was very helpful. He has arranged the insurance based on Shared Accomodation. In our case, since we have individual agreement with tenants for minimum 1 year, it wasn't difficult to obtain the normal insurance. I'm very happy with the outcome.
Once again thank you very much.
Cheers,
Kumar
Try GIO for insurance, we have our rooming house with them. Rooms with 4 or more tenants now have to be registered. Here is a link that might be helpful:
http://165.142.249.2/CA256902000FE154/Lookup/CAV_Publications_Rooming_Houses/$file/Rooming_House_Operators_Guide.pdf
Sorry I will correct that! A house with 4 or more tenants now has to be registered to be a rooming house. With the local council that is.