The following is a contribution by a good friend & mentor, Joe Davila:
Dwelling Policy for Rental Property
The idea of owning rental property appear to be gaining popularity as investors tire of the see-saw affect of the stock market. For those who are able to invest in real estate have been and perhaps been able to make money until the unfortunate happens and suffer a loss.
With any investment, you would want to protect it. That's where Dwelling insurance or what some would call it, Landlord insurance comes in. It is very important to read your declarations page of your policy or schedule a time to go over the coverage with an agent.
You may be surprised with what your policy may or may not cover; it can be costly to find out after a loss has occurred.
What's covered under a typical dwelling policy:
- Fire and Lightning
- Sudden and Accidental damage from Smoke
- Windstorm, Hurricane and Hail
- Explosion
- Aircraft and Vehicles
- Riot and Civil Commotion, or
- Vandalism and Malicious Mischief
With some insurance carriers there is an endorsement that many real estate investors may not be aware, "Fair Rental Value". If a loss does occur which makes the dwelling location wholly or partially untenantable, the endorsement coverage will cover fair rental value. According to BusinessDictionary.com the definition of fair rental value is: probable amount the owner of a property could reasonable except to receive from a stranger for lodging. In other words, if your tenant has to move out because of a loss that has occurred, the endorsement will cover your rental income that as been loss.
In addition, depending who the insurance carrier is the deductible clause does not apply to fair rental value coverage.
In the world of real estate investing can be very frustrating if you did not have the proper coverage in your investment. One can not overly emphasize the importance of reviewing your current policy and periodically sit down with a professional insurance agent that cares about your investment as much as you do.
Joe A. Davila
CPIA
One Source Insurance Agency
(Click here) if you'd like to know more about the different types of insuance coverage for investment properties.
Comments(0)