A lot of landlords focus on maintaining their rental property and seeing to it that renters are paying on time and such. However, they often overlook the importance of insurance to the benefit of their property. Running a rental property is not just about covering the expenses, calculating the figures, maintaining the premises and the like. Keeping your property insured and getting the right insurance policy are equally as important.
Every landlord must get a landlord insurance policy. To see to it that you are getting the right coverage and you’re not missing anything essential, here are five things you must know about insurance. Let’s take a look at each of them.
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1. Homeowner’s Insurance for Rental Property
There is a separate and specific insurance for rental property. You need to get the homeowner’s insurance for rental property designed for landlords like you. The coverage levels can range from basic to broad. You can determine the narrowness or broadness of your coverage through the combination of “open perils” and “actual cash” or “replacement cost value” you avail.
You can choose a less extensive or open perils coverage. In the former, which is also known as “named perils,” you are only covered for the perils specifically listed in your policy. You need to be sure which perils, around 10 to 12, you think you want your rental property to be insured from. You can also opt for open perils coverage. This insures your rental property against an extensive range of perils, including losses due to wind and fire. However, there are things that are excluded in this coverage, such as earthquake and flood. You are insured to almost all possible perils, except those expressly excluded therein.
Another important thing to decide on is replacement cost value as opposed to actual cash value coverage. In replacement cost value, you insure your property according to how much it would cost to rebuild the destroyed property. If you purchase this type of policy, you will be getting the amount to cover all the cost to rebuild the property from ground up in case of a loss. In actual cash value, you are insuring your property according to its actual cost when it was built. However, due to depreciation, it will cost more to rebuild your property if it is completely destroyed. So chances are, your insurance will not be enough to cover all the expenses to fully rebuild your rental property. While replace cost value coverage costs you more when you’re paying the insurance, it is still the better choice because you are rest assured that you are fully covered to rebuild your property.
2. Liability Coverage
When you own a rental property, you must anticipate a lawsuit. There is always a possibility that your tenant will sue you for certain reasons like wrongful entry or eviction. You might also get sued for any injury that happens in your property suffered either by your renter or guest. If you are not insured and you don’t have enough extra money for unexpected medical and legal costs, such event will hurt you badly financially. To be financially ready for such unexpected expenses, make sure that you get broad liability coverage.
3. Protection Against Rental Loss
There are instances when you can’t legally collect rent from your tenant, such as when they have suddenly moved out because of a severe damage the property they rented from you. Normally, cost of the rental payments is covered by your landlord insurance. However, this only covers a certain short period of time. If you want to be covered for longer periods in the event that there are no occupants in your rental property, you can purchase more account or coverage. This way, you can surely protect yourself against loss of rent.
4. Insuring a Personal Property on the Premises
If you want to save on your insurance, include any personal property within the premises of your rental property. You don’t need to pay for personal property coverage for such property, as this would only cost you more. All you need to get is a coverage for it. Insure it too along with your rental property. This will help you protect your property and the belongings therein without spending so much more than you have to.
5. Independent Agent
It’s an advantage if you work with a trusted independent agent. Such agent can help you open up your options. At least, you have a professional whom you can count on and pose questions to. You can simply raise your concerns and you will get a personal response to your situation. With the help of an independent agent, comparing coverage options and finding the insurance policy you need, tailored to your concerns and preferences, will be easier.
Always remember that insurance is a landlord’s best friend. Visit our homepage to request a quick quote from us today.
