One of the best ways to protect yourself and your rental property is with adequate insurance.Many of the landlords we talk to are confused about what they’re required to have, and we always recommend that you invest in more than the basic requirements. This is one of your most valuable assets, and you want to make sure you’re able to rebuild and replace anything that’s destroyed. You also want to protect yourself from liability.
Rental Dwelling Insurance Policies
One of the most popular questions we hear is: what type of insurance do I need?
At the end of the day, your rental property will be best protected with what is referred to as a rental dwelling policy. This policy will basically cover anything unexpected that happens to the home including fire, ice storms, wind, etc. It is not an expensive policy, and there is no huge increase in price when you move from a homeowner’s insurance policy to a rental dwelling policy.
Just make sure your insurance agent or company is aware that you are now renting out your property. If you try to maintain your homeowner’s insurance while tenants are living in your property, any claims may not be covered. You need the proper policy in place.
Umbrella Policies Can Offer Additional Protection
Another option for providing insurance for yourself and your property is to consider an umbrella policy. You can obtain this coverage for a low yearly cost. A million dollar policy, for example, will probably only cost you a couple of hundred dollars per year. That’s a big deal because anything that first policy does not cover will be covered by your umbrella policy.
Additional Insurance Considerations
It’s important to remember that your tenant’s belongings will not be covered under your dwelling policy. For this reason, it’s in everyone’s best interest for your tenants to purchase renter’s insurance. This type of coverage is usually less than $20 a month, and it covers your tenant’s personal possessions. If there’s a fire or a tree crashes through your roof, the dwelling policy will cover the repair of your property. But, if the tenant’s electronics and furniture are damaged, there won’t be any money to pay for those things unless there’s a renter’s policy in place.
You’ll want a policy that includes loss of rent coverage. If something catastrophic happens at your home and it’s uninhabitable, you’ll need to move your tenants out of the property, and you won’t have any rent coming in. This is where loss of rent insurance can protect your income and ROI.
The best insurance suggestion we can give is to get your rental dwelling policy, add an umbrella policy over the top of that, and require your tenants to have renter’s insurance. Then, you should really be covered and sleep well at night knowing you have the necessary insurance.
If you have any additional questions, please contact our team at PropM Property Management. As a professional property management company serving the Sarasota/Bradenton & Portland areas, we’d be happy to provide additional advice on your specific insurance needs.