What Are the Key Features of a Successful Landlord’s Policy?
These are some of the key features on a landlord’s policy：
Aim for full replacement cost: Although policies may differ, aim to get as close as you can to 100% replacement cost for your property; this way, your insurance will cover the loss. Insurance contracts may differ by state. If you are unable to obtain a guaranteed replacement cost, look for the extended residential coverage option.
Stay safe under the umbrella: Small business owners can also use an umbrella insurance policy to prevent risks. An umbrella policy is an extra layer of coverage beyond the insurance you already have. For example, if the damage from a claim exceeds the amount covered in your standard insurance, umbrella insurance will cover the difference. The good news for small business owners is that if you have four or fewer units, you also have access to these policies. You must also set the amount of housing liability insurance to ensure the umbrella policy covers liability beyond the scope of the underlying insurance. Depending on your situation, you may find a million-dollar umbrella policy for a few hundred dollars a year.
If you have too many properties, or you’re not eligible for a personal umbrella policy, we recommend checking out the Business Protection Umbrella Policy.
- Keep your insurance updated: Unless you adjust regularly, your insurance coverage may remain the same while property values and the cost of rebuilding both rise. Remember, since you are insuring your building instead of the land, you need to check the cost of construction per square foot for new homes in your area. This will help you determine if your coverage is enough to rebuild the structure. If you are unsure of the cost of rebuilding, ask your insurance broker or contractor.
As building costs rise, building codes are updated and modernized, so make sure your policy has a clause and/or sufficient coverage to rebuild the structure into the current code.
Consider lost rental income: If your rental property is severely damaged to the point of being inhabitable, you can no longer collect rent from your tenants. In this situation, it’s essential to have a clause in your insurance policy covering the loss of rent. Regardless of your personal circumstances, you must still make your monthly mortgage payments. Even if the building is damaged, your payment obligations will not stop. Therefore, make sure your landlord policy covers lost rental income.
Get adequate premises liability: Also known as "slip and fall coverage," premises liability insurance will protect you as a property owner from accidents resulting in injuries that occur on your property. If you choose this coverage, you also need to ensure it covers the amount required by your umbrella policy. For example, your umbrella policy may require $300,000 in insurance each time and only then assume responsibility for exceeding that amount.
Purchase extra coverage for any condominiums: Your Homeowners Association (HOA) will adopt some form of master strategy to cover the building itself. In addition to the main policy, you may want to buy insurance to cover damage to the interior of your condo or protect yourself from liability if someone gets injured in your unit.
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