What Is Landlord Insurance and Why Do You Need It?
Want to understand how landlord insurance can provide you with extra protection? Then check out our complete guide to landlord insurance and why you need it.
Last year 43,000 new homes were built with the purpose of becoming rentals. With foreclosures becoming less plentiful, real estate investors are looking to buy new. With this increase in investment, landlord insurance is more vital than ever.
If you own rental property, it's a great source of additional income. You need to protect this investment. If you don't have landlord insurance, you're leaving your investment and yourself vulnerable.
Keep reading to learn about this essential insurance.
Homeowners Insurance Isn't Enough
Novice landlords think that their homeowner's insurance will protect them. This is often not the case, as most homeowner policies have stipulations that they only cover owner-occupied homes. So while single-family homes are the perfect investment, you need to have a different kind of insurance for them.
What Is Landlord Insurance?
This insurance provides you with coverage when you rent out a condo, apartment, or residential home. It can give you protection in the event of a fire, weather damage, or break-in. This covers your loss of income when your property becomes uninhabitable through no fault of your own or your tenant.
There are three areas of coverage that any good landlord policy will have: property damage, loss of income, and liability coverage. These three categories ensure you're covered during all aspects of being a landlord.
The ideal amount of coverage is a policy that will replace your entire rental property should you experience a total loss. It should cover physical damage to the building and the loss of your personal property. The policy will typically stipulate that the loss must be from theft, vandalism, storm damage, or fire.
Loss of Income
If you lose the ability to rent out your property, that's monthly income you'll no longer receive. This portion of the insurance covers this loss. It typically kicks in when your property becomes uninhabitable.
As the owner of the property, you'll be held liable should someone get injured on the property. The liability portion of your insurance covers you in the event of a liability claim or lawsuit. You could have to defend yourself in a claim of bodily injury from the tenant, one of their visitors, or a trespasser.
The legal costs to defend yourself will add up quickly. Plus, there are the losses that the injured party can claim.
You could face having to pay legal fees, settlement costs, funeral costs, and medical bills. The average award by a jury for a premises liability claim is $1,447,604.
This coverage also protects you should you be found liable for the damage of someone else's property. If your condo has a leaking pipe that you fail to fix, and it causes extensive damage to the condo below yours, you're liable. This portion of your coverage will cover the cost of repair to the other condo.
Expand Your Rental Inventory Today
Now that you know how to protect your real estate investment with landlord insurance, it's time to expand your property inventory. Make sure that you have landlord insurance for each of your properties. You may be able to negotiate a better rate as you acquire more real estate that needs insuring.
Browse our listings today and find your next investment rental property today.
Protect This Property: What Is Landlord Insurance and Why Do You Need It?