Owning a property, just like any asset, requires protection. There are inherent risks that come along, especially in the wake of national disasters. This can be acts of nature like flooding, fire, and earthquakes. Otherwise, you could lose out your income stream when your property investment undergoes repairs.
Having an insurance policy mitigates your risk. However, there are many different kinds of insurance out there, and you should know which one is suitable for you. Below are different types of insurance that are useful for a property owner to consider:
Landlord insurance is defined as a policy that provides property and liability protection for property owners that rent their property to tenants. This type of policy may also be known as dwelling fire insurance.
Landlord insurance is used in place of homeowners insurance and offers similar protections, helping the landlord recover from financial losses in the event of certain covered perils. There are many companies that offer landlord insurance policies out there. A comprehensive landlord insurance policy will encompass these three protections:
1. Property Damage
This ensures that you can file a claim when a natural disaster strikes like fire, earthquake, and even electric/ gas malfunction. In case a tenant commits a violation by vandalizing your property, you can also file a claim.
2. Lost Rental Income
If your property becomes uninhabitable due to fire or weather damage, you can receive compensation for lost rental income while your unit is being repaired and remains vacant.
3. Liability Protection
If your tenant sustains an injury that resulted from property maintenance oversight such as structural damage, you can file for a claim to help you pay for medical expenses and avoid being sued by the tenant.
Umbrella insurance is defined as insurance that provides additional coverage over and above existing limits of underlying insurance policies. It can be protective insurance for injuries, property damage, select lawsuits, and personal liability cases.
Umbrella insurance is useful since it can protect your home investment assets, providing extra layers of benefits that extend above your homeowners’ insurance. Other protection it provides includes claims on liability coverage on your rental units.
For example, if your renter owns a dog that bit a neighbor that finds you responsible for the injuries he sustained, then you may need to use your umbrella insurance. Another example would be a tenant who complains and files a lawsuit against you when he stumbled on a sidewalk crack in your premises that resulted in an injury. If your existing liability limits are not enough, you can then make a claim on your umbrella insurance.
Renter’s insurance is an insurance that offers coverage for a tenant’s belongings, liabilities, and even living expenses in the event of a loss. This type can be availed to those renting in a single-family home, apartment, condo, etc. This type of insurance is very handy if injuries to a guest result while living in the property. Outside a landlord’s negligence of structural problems in the property, the tenant can file for a liability claim on his renter’s policy.
Most landlords require their tenants to get renter’s insurance, says Dawson Management. This is for the tenants’ protection, since a landlord is not liable for any losses or damage of a renter’s belongings. If a disaster occurs, a renter without insurance could stand to lose his valuable items without the property owner handing a single dime to the tenant. This is one of the primary reasons renter’s insurance is so vital.
As a landlord, it’s very important to know about the different kinds of insurance available. Knowing each insurance policy’s limitations will help you decide what type of insurance to buy. Don’t assume that standard home insurance will cover all you need for your rental property. Review each insurance policy and protect your assets. An extra layer of protection will help you gain peace of mind.