If you own an investment property that you rent to tenants, have insurance coverage on that property. This property can include apartments, condos, and residential homes. However, people assume their homeowner’s insurance will suffice. If you are a landlord, protect yourself from financial losses from fires, severe weather, and/or break-ins with landlord insurance.
A good landlord insurance policy should protect in three areas: property damage, loss of rental income, and liability protection. Fire, an earthquake, natural disaster, or vandalism can cause property damage, but it is not limited to these. A loss of your rental income may occur if something causes the property’s total in habitability. This can include rats, termites, mold, and if your property gets swallowed by a sinkhole. Landlord insurance may provide rental reimbursement to cover the lost rent.
The landlord policy should also have liability protection. If you suffer an injury on the property because of maintenance issues, landlord insurance may cover this. These injuries may result from icy sidewalks, a mean hive of bees, or a building collapse.
Some terms seen in a landlord policy should be mentioned. A deductible is the amount paid before the insurance pays. A limit is the largest amount the policy will pay following a covered loss. Some policies will also allow you to determine your own deductible and/or limits for the policy. However, this freedom to decide could mean higher premiums for you.
You can also select to add “riders” to your landlord insurance policy. Common “riders” include flood insurance, emergency coverage, and guaranteed income insurance. These “riders” may not be necessary for the policy, depending upon your situation, but can provide additional benefits for differing situations.
The benefits of landlord insurance include covering parties in a lawsuit, including the owner and/or manager of the property. Having landlord insurance makes sense when repairs become necessary on the property. Third, landlord insurance will help a property manager if a tenant defaults on the lease agreement.