Owning rental property is frequently thought of as a viable financial investment because if it’s managed properly, it can provide the owner with a steady flow of income! Just like anything else that has the potential to provide massive financial gains, there are also risks involved, which will make any landlord want to review their insurance coverage.
How Does Landlord Insurance Aid You in Protecting Your Investment?
Landlord insurance policies are like a standard homeowners insurance policy, but there are a few very important differences. Landlord insurance will always apply to the properties that are rented out to legally occupying tenants, and will not protect a place that you or your family occupy. One vital benefit is that landlord’s insurance comes with higher liability limits, because rental property owners can take on a sizably larger amount of risk than those who are protecting their own home.
Since the primary reason for the landlord owning the property is to generate income, a huge part of landlord insurance is that it provides coverage for lost income, which the homeowner’s plans will not do. Some rental properties will require that their tenants have renter’s insurance policies to provide aid in covering stolen or damaged possesions and prevent any unwanted distress or financial damage from coming back to you as the owner.
What Are the Coverage Benefits of Landlord Insurance?
Landlord insurance policies come with three basic coverages:
- Property Damage: This coverage is there for you when any serious physical damage or other types of loss occur to the property and even structures nearby, including garages, sheds, and fences. This type of coverage can also aid with items that are left temporarily on the property site to help maintain upkeep such as a snowblower.
- Liability Protection: Much of the liability will fall on you as the landlord, as you can ultimately be held liable for harm to residents due to ice, general decay, and problems with pests. Liability coverage will pay out the medical or legal expenses that may stack up if you have been deemed negligent.
- Rental Income Protection: This will help provide temporary financial assistance if a rental property is unlivable for a short amount of time. It does not apply if you are planning on making additions or renovations, but it’s a huge help if a tornado or structural problem affects one of your units.
Is Landlord Insurance Going to Be Expensive?
Several factors are in play when it comes to the cost of landlord insurance. Things to look at are the aging condition of the rental property, the location, and any built-in features that your insurance provider deems high risk. As a rule, landlord policies may cost 25% more than typical homeowner’s coverage, because it offers so much solid protection for times when you will need it most. The average home insurance policy providing $250,000 in coverage is around $1,400 a month, according to the Insurance Information Institute. This means that you will realistically be looking at a landlord insurance premium amount of around $1,750.
What are the Most Important Factors to Consider Before Buying Landlord Insurance?
We have been helping individuals just like you build their dreams for years, and if you already own a rental property or are thinking of purchasing a one and becoming landlord, we encourage you to shop around to find a policy that best fits your needs. Here are some of the most important things to consider while looking for optimum coverage during challenging times:
- Length of term: is this a short or long-term property?
- The rental history of your current tenants
- The reasons why this property is a rental instead of owned
- The amount of income you expect
- How far away you reside from the property
- Level of responsibility for upkeep and maintenance
- If renter’s insurance is an option or required for tenants
- Any discounts the landlord may quality for
Finalizing the decision to become a landlord is one that will brighten your future and give you security in the long run. Landlord’s insurance is crucial in making sure that things stay afloat if you hit a rough patch that is not covered by a standard homeowner’s policy. Our expertise can help you with valuable insight and coverage options!