Landlord Insurance
What's "Landlord's Insurance" and do you need it??
Got a condo? Your regular condo association fees do NOT cover interior damage to your unit! It will only cover common property elements like (possibly, no guarantee) roof, exterior part of walls, and maybe windows! Request and read your condo insurance policy - you'll be surprised at how little it will cover in the event of a hurricane or flood. And the insurance DEFINITELY won't cover tenant liability!!
Own a townhouse or house? Don't assume your regular homeowner's insurance policy will cover damage or liability from your tenants. DO YOUR RESEARCH! SHOP AROUND! CALL YOUR INSURANCE AGENT! Landlord insurance policies are usually very reasonably priced - and usually cost less when you switch from living in your property yourself to covering the property as a rental. COVER YOUR LIABILITY!
Think of all the potential for liability when you own a property that other people live in. What if your tenant slips and falls, and sues you? What if your tenant leaves your property with more damage than is covered by the security deposit you've collected? And what happens when you have to evict, and are out months of rent and have incurred legal fees?
All or much of the above costs could be covered in a fairly inexpensive "Landlord Insurance Policy"! There are many, many companies offering these policies - and policies can be tailored to your budget and your needs.
Some factors to consider when shopping around for a Landlord Insurance policy:
Deductible: if you have extra money in your budget to cover your rental unforseeable costs... consider a high deductible policy that will keep your overall monthly/annual cost low. Strapped for cash? Lower deductibles allow you to pay less when you place an insurance claim, but the monthly/annual cost will be more.
Actual Cash Value vs. Replacement Value: many policies will offer you a choice between the two. Generally, you'll pay a lower premium for an "actual cash value" policy because whatever you are replacing or repairing will have a depreciated value. If you elect to have a "replacement value" policy, no matter the age/depreciation of the property or repair, you will receive the actual current fair market value to replace - without depreciation. There is normally a higher premium for "replacement value" policies because it costs the insurance company more.
Legal Dispute Coverage: some policies will allow you to pay for additional "legal dispute coverage". This could cover you in the event of an eviction or other legal dispute where you are compensated for legal fees and loss of rent during that time period.
Damage: policies can cover things like "tenant damage" above and beyond that which is covered by their security deposits. Some companies will charge additional to include this coverage.
Liability: all policies should cover for liability. For instance, what happens if your tenants were putting up the hurricane shutters you provided to them.... and someone falls off the ladder while doing so? They could sue you, the Landlord/Owner. What if they have a guest that slips and falls on the front sidewalk - and wants to sue you as the Landlord/Owner?? Liability coverage should cover these types of instances and potential for liability.
Shop around and compare policies from the different companies. All policies are different, and you should take out as much coverage as you can, to help you avoid potential for financial disaster. And remember, insurance costs of your rental property could be a great tax deduction!
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