Do you have landlord insurance? If you own even one rental property, you need to get some. If you already have landlord insurance, do you know what your policy covers?
Check Around And Compare
When you are looking for an insurance policy, I always recommend that you talk to at least two or three insurance companies. Prices and coverage can vary wildly from company to company. Always talk to more than one company to insure that you get the best coverage and the best rate for landlord insurance.
You May Have Trouble Finding Coverage
If you are a landlord that only has a few houses, you shouldn’t have too much trouble finding an insurance company to cover your houses. However, I know several landlords that have more than a 100 houses and they have trouble finding one company that can cover all of them. Landlords with a lot of rentals usually have more than one company insuring their properties.
What your landlord insurance covers will depend on the type of policy you are able to purchase. Click To Tweet
What your landlord insurance covers will depend on the type of policy you are able to purchase. Property damage is the most important coverage that you absolutely need. Even good tenants can have an issue and for example have a house fire. This policy will also cover you if you have a bad storm and a tree branch goes through the roof. You need a policy that will cover the replacement costs for the entire value of the rental property in case of a catastrophic loss.
You will also need a landlord insurance policy that has liability insurance. This will cover you if your tenant, a visitor to the property or even someone trespassing on the property is injured. Liability insurance will help cover the cost of any bodily injury claims, medical bills, the cost of a funeral, legal fees or even a settlement. What if you are blamed for failing to fix a leaking water line. This then leads to mold which affects the health of the tenant or destroys their belongings? This policy will cover you as well.
What if your property suffers a revenue ending problem. Click To Tweet
Loss Of Income
Do you think vacant units are a problem? What if your property suffers a revenue ending problem. You may be able to get a loss of income policy to cover you. But, but cost may be a factor here. This policy may be too costly for the average landlord. It is a great policy though because it will cover you if you are unable to rent your rental property due to storm or fire damage. This policy continues to pay the monthly rent while the unit is uninhabitable.
Depending on where you live, you may need flood insurance. In some areas, it is not optional. This type of policy that can be very expensive. My advice to you is to avoid buying rental properties in flood plains. It is possible that you will find you now own a rental property in a flood area if the map is redrawn which they do periodically. Be sure that you know exactly what this policy covers. You don’t want any ugly surprises if you do need to use it.
When you talk to an insurance agent, you will find that there are other policies available. They will vary by area. You can usually buy policies like rent guarantee insurance, natural disaster insurance, landlord contents, etc. Talk to the local insurance agents in your area to get an idea of what is common and available.
As with anything, you need to weigh the cost of the policy against the amount of rent you are getting. Click To Tweet
Cost Versus Reality
As with anything, you need to weigh the cost of the policy against the amount of rent you are getting. You will need to get at least get landlord insurance that covers you from property damage and liability, no matter what it costs.
If your cash flow allows it, then some of the other policies should be considered to help protect you from a huge financial loss.