Being a landlord is more than just paying a mortgage and collecting rent. You’re operating a business and you’ll want to protect yourself the same way any other business protects itself from potential liability. It’s a cost to consider when deciding how much you need to charge for rent so plan accordingly. Here are some tips when looking for landlord insurance:
Why landlord insurance is required
So you decided to become a landlord but your current home insurance isn’t enough. Why is that? This is because your homeowner’s insurance only covers the home when you are living in it. It won’t cover your tenants and many municipalities and states require landlord insurance in order to do business. If there’s damage to the property or someone were to get injured on your property, you want to make sure you are covered for any potential liabilities that may put your entire investment at risk.
What does landlord insurance do?
What exactly does landlord insurance cover? First, you need to remember that when you become a landlord, you are becoming a business. Just like any other business, you want to protect yourself from any unforeseen misfortunes. This includes property damage. Landlord insurance covers all kinds of damage. It can be natural or accidental damage. It can be from vandalism. Any kind of damage you can think of.
There’s also a loss of income/rental default insurance. This can help protect you in the unfortunate circumstance where your rental property becomes uninhabitable for any reason. This feature will cover any rent you cannot collect over a short period of time because of the damage to the property.
Landlord insurance will also cover any injuries that happen on your property. This will protect you if a tenant gets injured on the property or even a guest they may have over. This will protect you if these injuries are caused by any maintenance issues, for example, if something collapses on the property.
Options to consider
When it comes to picking the policy that is best for you, you’ll also want to look into any add-ons that may address any additional coverage you need. One example is guaranteed income insurance. This can help protect your cash flow by making up for rent if a tenant comes up short.
Flood insurance is one that ultimately may be required depending on where you live. If you live in a floodplain or an area where there are severe storms, you might want to consider getting flood insurance.
Additional construction expenses are a great option if you are renting out an older property that may need to be brought up to code. While plenty of older properties are covered by a grandfather clause, that may not always be the case, especially if it comes to health and safety issues.
What are the costs?
There’s no way to know how much landlord insurance is going to cost when it comes to your specific property. There are a variety of factors that come into play when calculating the cost. Some of these factors are the location and the age of the property. When you are budgeting or considering becoming a landlord, this will be a cost you want to consider to make sure leasing your property will be profitable.