Introduction to Landlord Insurance
Should you own certain kinds of rental properties, such as those situated in a single family home, condo or, for instance, the space above the two-car garage, and if you also have a paying tenant, then most likely you will greatly benefit from the substantial protections inherent in good landlord insurance.
What it does
This coverage is a specialized form of protection that is designed to safeguard the property owner from various and sundry losses that are often the result of owning rental property. It is not, however, normally available to you if you intend to live in the dwelling that otherwise would be rented out. This type of coverage will usually protect the structure of the building and will also have an aspect of coverage that includes liability protection and the ability to repair or replace the structure should it be damaged or destroyed.
There is a myriad of options available with these policies, such as coverage for the landlord’s personal property that may or may not be utilized by tenants. This policy, though, will not cover the tenant's personal belongings so he or she would need to look into renters insurance on their own. It is important to keep in mind that banks and other mortgage lenders will normally stipulate that a landlord carry this type of coverage and to keep it in play for the entire term of the loan. Not surprisingly, given the protections that are inherent in this coverage, if one is free and clear from having a mortgage to pay, it would still be greatly beneficial to the landlord to carry this coverage in light of the financial benefits it affords.
How it operates
When a landlord policyholder has some kind of damage to rental property, he or she is free to file a claim so as to recover monetarily from the loss that arises from the covered damages, whether inside or outside of the covered structure. The protections can extend to what is the consequence of flooding from a plumbing issue or an overflowing bathtub, a roof being damaged due to a severe storm or other many possible events or accidents. When the landlord files a claim, he or she first must pay the agreed upon deductible prior to any compensation being released. The insurance provider then will pay the balance of the expenses, up to the limits of the policy. Keep in mind that if the policy limits are exhausted, any further needed repairs will need to be covered by the landlord out-of-pocket.
When shopping for this type of coverage, you can check in with your insurance provider as to the many possible ways to save on premium expenses, like choosing a higher deductible for instance. (It is important to remember that the higher the deductible is the more of a strain it might be on your budget, so be sure you can pay the deductible comfortably should the unexpected happen and a claim needs to be filed.) Other ways to save include property upgrades, such as putting in more secure locks on doors, installing a burglar alarm or buying a cutting edge fire alarm system. Each insurance provider has its own offerings of credits and discounts, so be sure to inquire as to what your insurance agent may have on tap in regards to coverage options.