Though most landlords will tell you their job is rewarding, they’ll also tell you it’s not without great personal risk, and that landlord insurance is one of the best investments you can make. A simple policy can mean the difference between seeing a profit and shelling out thousands a month for legal and property damages. For just a few hundred dollars a year, you can ensure that you are protected from property damages, maintenance issues, contract disputes, and even rental defaults from tenants.
Landlord insurance ensures that you’re covered when disaster strikes, and it’s something you don’t want to be without. Imagine if the Texas rains become so much in the Houston area that your rental property is washed away. Sure you’ll have home owner’s insurance, but it’s also important to make sure that you, your assets, and your finances are insured in the event of a lawsuit or any other unforeseeable damages.
When you’re choosing the right insurance for your rental property, tread carefully. It’s easy to get caught up in an insurance policy that doesn’t fit your specific needs. If you’re new to the landlord insurance game, use this guide to get you started on finding the perfect policy for you.
Consider Your Coverage Options
Begin by researching your coverage options. Like most things in life, landlord insurance is a little more complicated than it appears on the surface. It’s a multi-faceted entity, and finding the right policy for you will mean exploring each of your options and comparing them to your needs. Here are some of the coverage options available to landlords.
• Property: This will cover you for any damage to your property, ranging from natural damage (earthquake, storms, fire, lightening, etc) to vandalism. It’s important to note that flood insurance is a separate policy. Ask your insurance what they recommend based on your property’s location.
• Landlord Contents: If you’re renting out a partially or fully furnished unit, don’t skip the contents coverage. This covers you in the event of damage to anything from appliances and chairs to carpet and paint. It’s worth the extra investment, particularly if the property is furnished with high-end items.
• Loss of Rent: It’s impossible to control every aspect of your property, and if your tenants find a mold infestation and have to move out, you’ll lose out on payments unless you have loss of rent coverage. This ensures that you’ll receive a rent payment if the property is deemed uninhabitable, so long as you’re working to get it back up to an inhabitable level.
• Liability: No one is safe from lawsuits these days, particularly landlords. Liability insurance covers you from legal issues associated with your property. In other words, your tenants can’t sue you if they fall and break their leg while on your property.
Other Handy Options
These coverage options can be quite useful, but they aren’t as common or as necessary as some others. Still, depending on the neighborhood of your rental home and the kinds of tenants you typically deal with, these options could come in handy.
• Rent Guarantee: This insurance deals particularly with tenants that default on the rent, which means that they are always late or miss payments. If you are renting to low-income individuals, this rent guarantee plan could be very useful.
• Unoccupied Rental: Unfortunately, it might be very difficult to keep your rental unit filled at all times. Though this policy won’t pay the rent for you, your insurance will still cover the property in case of damages, even if the property is vacant for more than 30 days.
• Landlord Emergency: For older rental homes, landlord emergency insurance is always a good option to consider. It will cover the cost of emergency repairs, such as gas leaks, plumbing issues, lockouts, and more.
• Guaranteed Replacement: If something happens to your property that would require a rebuild or complete renovation, the guaranteed replacement policy will take care of all associated costs.
Take stock of your specific needs and then decide which policies apply best to your situation. Ask a trusted insurance advisor for suggestions if you aren’t entirely sure which policies you’ll need.
Screen Insurance Agents
Insurance can be a tricky game. It would be nice to say that insurance companies always attend to your claims without dispute in a timely manner, but that’s just not true. You want to do everything you can to ensure that you’re hiring an agent or company who will treat you, your property, and your tenants professionally.
The best way to avoid getting mixed in with a sneaky or stubborn insurance company is to screen prospective agents well. Make sure that you are asking the right questions and you feel satisfied with their answers. Look for an insurance agent that treats you like a human being and is concerned with getting you the best deal and the best coverage. For more ideas on screening insurance agents, see this blog post.
Look for Insurance Packages
Often times, insurance comes in packages in the rental world, and you can save a fair amount of money on a policy if you bundle different types of insurance together. For example, many insurance companies will offer you a discount if you bundle your landlord insurance and homeowner insurance for multiple properties in the same policy. These kinds of incentives are the best way to cut costs on this necessary measure.
Utilize Green Residential
Insurance isn’t easy to navigate, especially if you’re new to the landlord business. However, it’s extremely important to find the right policy to protect yourself from the unknowns that come with renting out a property, and Green Residential can help.
We are a team of experts devoted to helping you get answers to any questions you have regarding every aspect of your rental property. We want your property to succeed, and we have many of the tools that can help make that happen. For any questions about how we can help you protect your income property from physical and legal damage, contact us today!