Whether it’s by storm, break-in, flood, blizzard, or natural wear, property damage can cost a lot of money. Paying for these damages out of pocket may put you in the red financially, which is why purchasing insurance is an important risk mitigation step every landlord should take. However, for many landlords, the question isn’t whether they should purchase insurance. The real question is, “What kind of insurance do rental properties need?”
Dwelling and Additional Property Coverage
Dwelling coverage, also known as property coverage, protects against certain perils and risks, such as fires, storms, or lightning strikes. However, different types of dwelling coverages protect you from more risks. Some more advanced dwelling coverage plans may protect you from fallen aircraft objects, earthquakes, power failures, war, or even nuclear hazards. Of course, these additions cost more, but paying the extra coverage is worth it for some landlords, especially if freezing pipes or mold are common issues. You can also purchase insurance that covers other structures on your property from these risks or perils, such as a shed, garage, detached garage, or gazebo.
Landlord Liability Coverage
Landlord liability coverage is arguably one of the most important kinds of insurance every rental property needs. This type of insurance protects you should a tenant become injured on your property or if your tenant’s property is damaged. It typically covers any legal costs if a tenant sues and any medical bills the accident may have incurred. Suppose a tenant injures themselves falling through the raised deck you said you’d fix. You wouldn’t have to use your personal assets to pay for their recovery if you have landlord liability coverage.
Loss of Rent Coverage
Loss of rent coverage protects you from losing income should it become uninhabitable due to the occurrence of a peril or risk. In these events, it’s unlikely that your tenant will be able to pay rent, nor should they have to for an uninhabitable property. This type of insurance will reimburse you for any lost income. However, ask your provider how long this coverage lasts if your property remains vacant for an extended period. The coverage may end after a certain time, and you’ll lose out on income entirely.
Personal property coverage will protect a landlord’s personal property left at the rental. Most providers will cover personal property landlords use to maintain the premises, such as lawnmowers, weedwhackers, and other tools. However, your insurance provider may also cover valuables left at the property, especially if you’re using them to furnish the property. However, note that personal property coverage does not cover a tenant’s personal property. To avoid future disputes, you may want to urge your tenants to buy renter’s insurance or include in your lease that they must purchase it.
No matter what insurance plan you choose for your rental property, let Excalibur Homes help you manage and keep your property looking its best, rain or shine. If you need property management in the Nashville area, we can use our 30-plus years of experience to help you get the most out of your investment.