While making money from a rental property can be really fun and exciting, understanding how to protect it to avoid any loss is essential.
- Liability: If a tenant or visitor gets knocked in the head by a falling awning or falls on a slippery walkway, you might end up in court. Premises liability protection may cover the injured person’s medical expenses as well as your legal costs
- Property: Rental property insurance typically covers damage to your building structure as well as any kitchen appliances or furnishings you’ve provided to tenants. It may cover damage caused by perils such as fire, wind, and hail.
- Renting Hazards: If a hazard such as a fire makes your property uninhabitable, landlord insurance may replace your lost rental income. AAA rental property policies include this type of coverage.
Coverage for property damage will cover the property if the real estate or furniture is damaged from:
I recommend going for a policy that offers replacement cost or replacement value coverage instead of actual cash value coverage.
We created a post about actual cash value vs replacement cost coverage if you want to learn more about the differences.
Lost Rental Income or Rental Default Insurance:
If your property is put in a position to be uninhabitable from things like:
A Sink Hole
electric / gas malfunction
Your rental default insurance would cover the rent money that you would be missing out on if a renter was currently occupying the property.
The liability protection works like it does with homeowners insurance, it covers the medical or legal costs that might come if a tenant or visitor suffers an injury due to a property maintenance issue such as:
Out-Of-Control Hive Of Wasps
How Much Does Landlord Insurance Cost?
On average, landlord insurance costs around 25% more than a comparable homeowners insurance policy according to the Insurance Information Institute.
However, the additional cost is definitely worth paying to have the extra coverage.
There are several factors that will determine what your rental property insurance will cost and they are very similar to what determines the cost of homeowners and renters insurance policies.
These factors are:
If there is a swimming pool or not
The size of the building and the number of rental units
The age and condition of the property, (Like, is wiring up to code?)
Security features installed, such as fire sprinklers, gates, alarms, etc
The Specific Policy You Purchase And The Size Of The Policy
One of the best features about landlord insurance is that it can be written off as a business expense on your taxes.
It is one of the few ways that homeowners insurance is tax deductible.
After speaking with the guys at Buttonwood property management along with recommending landlord insurance they also advise landlords to offset capital expenses or to improve their property, utilities, property losses.