Protecting yourself financially must be your first priority if you’re a property owner or a landlord. We say this because incidents causing financial loss to you or your property are very common. According to a survey, about one in twenty homes with insurance has a claim every year. In fact, the Insurance Information Institute found that the average damage claim added up to $13,687 during the last four years. This financial loss can be even bigger if you own multi-family buildings.
Let us delve into the details to understand why you need rental property insurance
What is Rental Property Insurance?
Landlord or rental property insurance protects property owners of buildings or houses who rent out units to others in exchange for money. If a renter damages the property or files a lawsuit against the landlord, rental property insurance can help them pay for the expenses.
Why Do You Need It?
If you want to rent a unit, consider purchasing rental or landlord insurance for coverage. Having a rental policy becomes even more crucial if you have a loan, because lenders could require you to have insurance.
Keep in mind that commercial loans for large units or multifunctional buildings often have higher insurance requirements. You have an option to pick your carrier.
However, if you rent a room in a primary residence, you get temporary homeowner’s insurance even if you inform your insurer ahead of time. It is possible that your insurer requires you to buy the endorsement covering the rental.
What Does it Cover?
Typically, a rental property insurance offers coverage for:
The coverage is for repairs to the dwelling due to instances such as natural disasters, fire, and vandalism. The policy also has coverage for items you keep on-site to maintain your property. These may include a lawnmower or other tools.
If your tenant or renter becomes ill or injured due to your negligence in property maintenance, it may cost you legal or medical expenses. Liability protection in your rental insurance policy will cover their medical costs.
Rental Income Protection
With rental income protection, a landlord can cover the operating costs if the renter doesn’t pay the rent. Moreover, if your unit is uninhabitable for any reason, you may need to prorate the rent. Rental protection ensures that you receive the rent in case your tenant is unable to pay the rent due to reasons like lease violation, or default.
Rental property insurance can help you protect you from risks when renting out a condo or home. The coverage may include liability costs, property damages, and most importantly loss of income for property owners.