Cover Your Assets
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If you own a rental property, make sure your insurance coverage is
protecting your investment. Most insurance companies offer specialized
insurance packages for landlords and property owners that help cover
any loss incurred by tenants, lawsuits, loss of rent and even
terrorism. Though in many cases, regular household insurance will
cover claims on rental properties, most household insurance policies
aren't tailored to the needs of landlords and therefore don't address
them. Sometimes simply having a tenant can make your home insurance
policy null and void - so check the fine print!
LOSS OF PROPERTY
The most basic coverage will protect you against major losses in case
of fire, high wind or other damages that make your property
unrentable. All policies are different however, and no one policy will
suit all landowners in all areas of the country. there are however,
two basic types of policies to choose from:
1. NAMED PERIL policies require the policy holder to choose specific
types of losses that will be insured against
2.COMPREHENSIVE policies provide much broader coverage and includes a
wide variety of accidental losses. Despite the name however, most
polices are not truly 'comprehensive.' Make sure to check the list of
exclusions before you make your choice.
INSURANCE AGAINST TERRORISM?
Aside from flood damage, one of the most widespread exclusions right
now are terrorist events. If you own a rental property in a major
urban center, you might want to look into coverage that protects you
against this as well. After 9/11, many agencies adjusted their
policies to exclude "terrorist events" from basic coverage. The
attacks, which cost the industry in excess of $40 billion, caused a
backlash that saw most companies raise prices, raise deductibles, and
alter polices to require policy holders to purchase terrorism
insurance separately (if available).
Increasingly however, specialized landlord policies address this issue
and provide some sort coverage for those who own rental property.
Though burned by the attacks on the world trade center, support from
the federal government has allowed insurers to get their courage back
up and give landlords the kind of protection they've been asking for
since 2001.
LOSS OF RENT
As part of their coverage for property owners, many companies offer
additional insurance against loss of rent. In most cases this applies
to situations in which the property becomes unrentable due to damage.
When this happens, the insurance company will cover the rent on the
property for a certain number of months. Other types of rent loss
protection cover long periods of time when a property goes unrented
that isn't due to damage or protect landlords against tenants who
default on the rent.
Landlords with multiple rental properties or buildings will probably
also want to consider insurance against lawsuits or policies that will
cover legal fees in the case of a lawsuit. Keep in mind that because
policies at different insurance agencies differ, you should shop
around to find the coverage that best suits your needs.
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The liability part is very important whether you have one or many
rental units. One lawsuit can wipe you out financially.
Also, the tenant would be wise to purchase a renter's policy for their
contents. No coverage here from the landlord. Also, the tenant can
be held liable for accidental damage they do to the property from
perils such as fire, smoke and explosion. A renters policy will
afford liability insurance for the tenant if this type of thing would
occur.
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