Do You Use Protection? (With Your Property)
- Apr 02, 2018
Renting out your property sometimes means having to deal with situations that can be difficult to predict, which is why many of the risks involved are not covered by regular homeowners’ insurance. That’s when it’s time to start looking for some extra coverage. This can come in several forms, from an umbrella insurance to landlord insurance or even alternative products that can be paid for together with the resident.
In order to make sure you deal with as few losses as possible as a landlord or property manager, there are a few precaution measures that you can take to minimize risks:
- perform background checks of potential residents
- get a legal counsel or even an attorney to work on the documents, contracts or agreements you use for renting the property
- perform regular inspections of the property to always know the state of things (great way to avoid paying for something that was damaged by the resident)
- ask the tenant to provide his/her own insurance (while this may significantly reduce the pool of residents interested in the lease, it can turn out to be one of the smartest moves for a landlord)
What insurance options do you have?
First of all, there is the classic choice—landlord insurance. This policy will cover the usual threats (from floods to theft) and additionally include malicious damage by the resident, rent guarantee, legal protection or liability insurance, among others. It is also recommended that you customize your policy to include loss-of-income coverage, particularly if you rely on the revenue from the rental property for a living or for other ventures. It is the best choice if you want to protect yourself against renters who cause harm. For example, if a resident’s dog bites someone and a lawsuit is filed. Specialists claim that often times, plaintiff’s lawyers go after the landlord for compensation.
However, this type of protection does not cover the private belongings of the tenant, nor does it care to his/her interests. What you also need to know is that landlord insurance can cost up to 20 percent more than the regular homeowners insurance, but you can get significant discounts if you use the same insurer for all your policies.
Then, there’s the contents insurance, which protects your household belongings. This is particularly useful if you are renting out your apartment partially or fully furnished. Here, you have two options—“new-for-old” and “as new.” While the first one will replace the damaged objects with new ones, the second one will only refund the depreciated value of the item (it takes into account the wear and tear).
The umbrella insurance is also very useful for those who own expensive assets and are at risk of being sued. This type of policy provides an additional layer of protection when the limit of the original insurance is reached. Also known as excess liability insurance, it is useful in case of property damage or, obviously, landlord liability. It can complement the homeowners insurance.
In order to make the best decision, you should first weigh in all the options and select the one that suits you best. After that, thorough research is necessary to compare prices and offers. If you already have a homeowners insurance, you can benefit from more convenient prices if you get more protection packages from the same provider.
There are also other alternative insurance products available that are more accessible and costs can be shared with the tenant, as both parts benefit from the agreement. However, these products don’t have such high coverage.