What Your Rental Property Insurance Policy Covers

What Your Rental Property Insurance Policy Covers

When looking into buying insurance there are multiple factors to consider. It is a confusing business and is not an area that people are generally very familiar with. Niche jargon and lengthy documents can make the subject of property insurance an inaccessible one, and the element of potentially unknown tenants inhabiting the property adds an additional layer of difficulty. Throughout the rental period, there is ample time for lots to go wrong- damage, theft, injuries- even natural disasters. As a landlord or property investor you need to protect yourself and your investment to the best of your ability. Purchasing a rental property insurance policy is a crucial part of ensuring your financial support in the event of unforeseen problems. Choosing the policy that’s right for you also means selecting a plan that has the exact amount of coverage you require- no more and no less. Read on to understand what your rental property insurance policy covers, and what that means for you!

Dwelling Coverage

One of the most important parts of a rental property insurance policy is dwelling coverage. This is the part of the policy you might think of first when your mind conjures up an image of insurance. Protection from physical damage, dwelling coverage will cover your property from things like storms, fires, and wind- but is limited to only the damage caused by these things. In most usual policies, other occurrences such as theft and vandalism, or natural disasters such as earthquakes or major flooding are not automatically included. That being said, you can purchase more extensive coverage plans if you so desire. This should depend on several environmental and situational factors that as a landlord you should be well versed on. If you are more concerned about theft of building components- especially based on the property’s location- consider saying “yes” and paying the extra fee for burglary coverage. If you are based out of an area resting on a fault line, or one that just generally has a higher number of earthquakes or instances of major flooding, it would be prudent and save you money in the long run to purchase flood coverage or an earthquake rider.

Liability Coverage

It is an unspoken, but omnipresent rule that as a homeowner or landlord you have to make sure that the outside of your home is not hazardous to any passersby. After a snowstorm, there is a good reason that people are out shoveling their driveways and front sidewalks- and it’s not the aesthetic appeal. Liability is the keyword, and it is the assumption of responsibility for anyone injured on your property that can reasonably be attributed to you. When you assume liability without a proper policy in place, insurance advisors at https://www.lopriore.com/condo-master-insurance-policy/ caution that things can get very expensive very quickly. Without proper liability coverage, property owners have to pay for all injury associated fees including but not limited to all medical and all legal expenses. Save yourself the headache- and the massive pay out- by making sure your rental property insurance policy covers liability.

Loss of Rental Income

What Your Rental Property Insurance Policy Covers

When a rental property becomes uninhabitable due to circumstances that you are insured for, loss of rental income will cover the resulting financial loss for a reasonable period. For example, if there is a large storm or accidental fire at your property, loss of rental income coverage will replace the rent that you would have earned as income for the duration of a reasonable building repair. This can be a lifesaver, as investors and landlords will not have to go out of pocket, and will not be experiencing a double hit to the wallet. However, landlords should be advised, overall upkeep and tenant’s personal belongings won’t typically be included. Depending on the property you are looking to protect, there are a variety of policies for rental insurance that might fit you best.

Other Considerations

Every rental property insurance policy is different, but some things will most likely affect your top choices for coverage. A frequently discussed conundrum is the homeowners vs rental property insurance debate. This is something to look at if you currently live in your rental property, and is generally dictated by the length and type of rentals occurring. A good rule of thumb when deciphering what will and won’t be covered by homeowner’s insurance is: the longer the rental, the more likely you will need to have additional coverage. For example, if you are looking to rent out a second home, the basement of a primary home, or another personal property for longer than six months you will almost certainly need rental property insurance. If you are looking at more spaced out, quick stays- especially to friends or family- homeowners insurance might just do the trick. Heads up to all you aspiring Airbnb’ers- having a high frequency of short stays might categorize your property as a business, which would mean seeking out a commercial policy to adequately account for the high risk.

A rental property can be an extremely rewarding investment, a chance to make money that when done right can earn you big bucks without necessitating an onerous amount of time or energy expenditure. The trouble comes into play when special circumstances arise, and losses occur as a result of a tenant over a long term rental period. Choosing the best provider and being informed on dwelling and liability coverage, as well as the loss of rental income will help safeguard your investments. Though it can be a lot to digest, familiarizing yourself with what your rental property insurance policy will cover, and understanding why certain coverages might better suit your needs is of the utmost importance. When done right, rental properties can see an impressive return on investment. So take the savvy reigns into your own hands! Understand what you’re protecting (and what you’re not), how you’re protecting it, and entrust the job to the provider that is the best fit. Hopefully, these insights on rental property insurance policies have answered your questions. Now continue to read up, and sleep well knowing that your money, and your freedom, are safe from doubt.