Updated June 8, 2022.
Rental properties are a great way to earn income for savvy real estate investors. However, in order to thrive, you have to find the right property and great tenants to fill them. It's also essential that you protect your investment by making sure that it has proper insurance coverage.
The best property management company Whidbey Island offers suggests landlords buy more than just regular homeowners insurance to protect their investments. So, what type of insurance do you need as a landlord? In this blog post, we'll discuss what types of insurance landlords need and why they're necessary!
Why Do Landlords Need Coverage Other Than Homeowners Insurance?
Property owners must take protecting their investment properties very seriously. As with any house, plenty of things can go wrong—especially when mixing tenants and rental properties. One way landlords can protect their return on investment in rental properties is by purchasing the right insurance policies.
Homeowner's insurance protects you against a variety of natural and human-caused calamities for a home that is your primary residence. However, homeowners insurance doesn't cover a property used as a rental. Therefore, when you have paying tenants and your property becomes a source of income, a property owner must buy landlord insurance.
With the right coverage, investors have protection against property damage, natural disasters, renters that don't pay rent, and other things that can go wrong. In addition, if someone is injured on the property, you could be held responsible as the building owner. Thus, to protect yourself against losses, you'll need the appropriate type of insurance coverage.
3 Types of Insurance Every Whidbey Island Landlord Should Have
If you've wondered "what does a property manager do," property management companies can be a valuable source of information on the different kinds of insurance property owners need. Here are some of our best insights!
Landlord Insurance for Property Damage
Landlord insurance covers the cost of repairing or replacing damaged property. In most cases, this type of coverage is required for landlords who rent their property out to tenants. This type of insurance will protect rental properties from a wide range of potential damage or situations that could lead to costly repairs if paid out of pocket.
However, landlord insurance won't always cover every potential scenario. For example, while most policies cover natural disasters and fire damage, standard policies don't often include flood insurance.
With a comprehensive policy, property owners can receive compensation when something goes wrong with a rental unit, and it becomes necessary to replace lost property or make repairs. When shopping for property damage insurance, compare prices, coverage options, and exceptions that could leave you without coverage in specific circumstances. A property manager can also review potential policies and help you choose the one that's the best fit for your rental properties.
Liability Protection Insurance
When you own a rental property, it is imperative to protect yourself from potential liability or lawsuits that may come your way. Liability insurance covers claims made against you by anyone harmed in an accident on your property. In addition, most liability policies pay damages up to the amount of coverage purchased and cover legal fees should a lawsuit arise.
This type of insurance can cover injuries that occur due to slip and falls, dog bites, or even if someone slips into a pool while visiting your home without being invited.
Rental Guarantee Insurance
There may be times when your rental property becomes uninhabitable, and you lose income as a result. Some situations that could cause a rental property to be uninhabitable include pest problems, termites, or severe mold that may spread throughout your property and cause damage.
If your rental property requires significant renovations because of these types of issues, you will lose rental income while the needed renovations or repairs are completed. When your rental property is covered by rental default insurance, you're protected from rental losses when you need it the most! Certain types of rent guarantee insurance can also provide income when a tenant cannot pay the rent.
A Property Manager Can Guide Your to the Best Policies
As with any investment, real estate comes with risks! The right insurance policies are a must for property owners to protect their investments and protect against potential income loss. If you're not sure about the coverage you need or how to compare policies, a residential property management company can help you find the best policies for liability and other unforeseen circumstances that may arise while your home is rented to tenants. A property manager might even be able to point you in the direction of insurance carriers who can bundle these coverages together and save you money.
The Joseph Group can help with expert insights, from protecting your property to finding tenants that take excellent care of your rentals! Reach out to learn more about our property management services and how we help investors protect rental properties and grow investment portfolios.