The Importance of Finding the Best Rental Property Insurance
It doesn't matter if you own just one piece of rental property or several, one of the wisest decisions you can make to protect your investment is to purchase the best rental property insurance available. This purchase protects you and your rentals, and can make a huge difference in how well the properties pay off in the future. Whether you use a couple of different rental property management companies, work with a team of real estate investors or are taking care of a couple of rentals on your own, it is always a savvy decision to protect your investments.
Benefits of Rental Property Insurance
You may think that since you have homeowner's insurance that it will cover all your insurance needs for your rental properties, but this isn't true unless you rent the space for just a few weeks each year. Rental property insurance helps cover the financial needs of replacing or repairing the building due to a fire, as well as other types of damage. It also protects you against a lawsuit if an accident occurs while someone is living in or visiting the rental property.
Tips for Locating the Best Insurance
Talk with a reputable insurance professional to determine what type of insurance coverage is necessary for your type of rental property. These properties are usually referred to as dwelling properties and the insurance coverage typically falls under one of three different categories. The DP-1 category covers loss due to basic circumstances, like a fire. Coverage under DP-2 pays for even broader emergencies, such as damage from a storm that involves hail or wind damage. If you purchase a DP-3 policy, the coverage expands to multiple situations. Generally, the coverage pays for anything -- except those situations that are specifically named as exclusions.
Another issue to discuss with the insurance professional is liability on your rental properties. This takes care of any injuries sustained on the property for which you may be liable. These incidents include animal bites, a fall or other injury that occurs to an individual whether they are inside the building or somewhere outside on the rental property.
Other Affordable Insurance Options
Ask your insurance broker about other options you can add on to your rental property insurance. These are called landlord protective properties. They cover equipment repairs or replacement of items like the furnace, boiler or other costly equipment inside the property.
Another option to consider is if you have to make repairs to the home or other type of rental property that makes it impossible to rent during a period of time. You can invest in coverage that pays for the loss of rent during the time it cannot be occupied due to a covered event.
Coverage vs. Higher Cost
Generally, most insurance brokers advise their clients to purchase the DP-3 policy. This is not just to make your premiums higher. These types of policies cover the replacement value of your property versus the actual cash value. This helps ensure that your financial situation stays healthy, no matter what unfortunate incidents occur.
You may feel that rental property insurance lowers your bottom line simply because it costs more than regular homeowner insurance. In reality, the increased cost is negligible and greatly increases your peace of mind if an unexpected act of nature or other emergent situation occurs.
Patrick Rogers is the Principal Property Manager for Asurent Property Management in Eugene Oregon and his company can be found here: http://www.propertymanagementeugeneoregon.com.