Types of Insurance for Landlords and Property Investors
Many property investors and homeowners do not pay attention to insurance despite its importance in managing and investing in properties.
If there should be total or partial property loss and you do not have appropriate insurance, you may have financial crises.
Your real estate investment may suffer or, in worse cases, you may lose your life savings.
You can take advantage of proper insurance for landlords to cope with the adverse effects of large losses.
Nevertheless, house owners must ensure that there is a balance between being cash poor and insurance rich.
In other words, you should ensure that your insurance does not lead to financial problems for your finances and business.
If your insurance costs are causing you any problems, you should have a second thought.
Moreover, you should endeavour to contact a professional insurance agent before committing to any insurance premium.
Make sure you discuss your specific needs and conditions.
This will not only offer advantages for landlords and property investors, but it will also provide advantages of tenants.
Different Types of Insurance for Landlords and Investors
- Hazard and fire insurance for the physical property – this is must-have to protect the renters and property.
- Liability insurance – this is also compulsory.
You can buy this for both your real estate business and physical property.
- Sewer backup insurance – this is also must-have insurance.
Alternatively, you can include it in your hazard and fire insurance to reduce the cost.
- Flood insurance for the physical property – this is conditional. It is only compulsory in a designated flood area.
Otherwise, you can decide not to buy insurance.
However, if your property suffers flood, you must understand that the hazard and fire insurance policy does not cover it.
Therefore, if your property is located in an area with a propensity to flood, it is recommended for you to buy the flood insurance.
- Terrorism insurance – this covers any act of terror that may affect your tenants and property.
- Builder’s risk insurance – this is an optional insurance policy that is designed for those that buy a vacant property and want to renovate it.
The Builder’s risk insurance covers the risk of property damage, injuries, and vandalism. That is not covered by the regular hazard and fire insurance.
Notably, this insurance is often very expensive than hazard and fire insurance as well as liability insurance.
- Loss of income insurance – as a landlord that is renting out your property to renters, you can buy loss of income insurance.
However, this insurance is not necessary for property investors who buy and sell properties.
- General contractor insurance – if you intend to act as a licensed general contractor that obtains permits and take care of all repairs and renovations at your properties, you need to get this insurance.
- Workers compensation insurance – if you intend to hire receptionists, contractors, superintendents and other employees to work under you and be covered by your insurance policy, you need this insurance.
- Umbrella insurance policy – this is optional.
However, it is good if you need extra liability protection.
Tips For Tenants and Landlords
With this list, you should understand the insurance you must buy to manage your property and cover it against any unforeseen occurrences.
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