What are the 4 types of insurance every landlord of income property must have?
As an investor, it always surprises me how much time and effort most investors put into finding, financing, rehabbing, and managing their income properties yet fail to protect their investments from innumerable liabilities. It's like many landlords strut around with the words "Please sue me!" figuratively tattooed on their foreheads in bright fluorescent colors! While you can never completely remove all risks involved in real estate investing, one of the keys to protecting yourself and your investment from many of the more common risks is having the proper insurance coverage on your income properties.
Here are The 4 Basic Types Of Insurance Coverage Landlords Should Carry
1. Property and Casualty Insurance - Property and casualty insurance protects residential rental property owners from storm, fire, and other catastrophic losses that could make their rental property uninhabitable. And uninhabiltable means not rentable.
2. General Liability Insurance - General liability insurance is third-party coverage. It reimburses income property owners if they are responsible for compensating another's losses. General liability insurance does not cover intentional wrongdoing such as arson or assault, but in most cases it covers negligence and general liability issues.
3. Flood Insurance - Flood Insurance is available for rental properties that are located in communities that participate in the National Flood Insurance Program. The federal government administers the National Flood Insurance Program, and insurance companies offer the policies to income property owners.
4. Umbrella Insurance - Personal or commercial umbrella insurance provides income properties owners with additional liability insurance coverage beyond the limits provided in a general liability insurance policy. It is also usually relatively inexpensive.
Here is What Your Insurance Coverage Should Protect You Against
1. Fire, storm and other catastrophic losses.
2. Liability for tenant and employee injuries.
3. Tenant or employee theft.
4. Malicious damage and vandalism by tenants.
5. Loss of rental income.
6. Libel, and slander by employees against tenants
7. Discrimination lawsuits filed by disgruntled tenants and employees.
8. Allegations of fraud, misrepresentation and other intentional acts by employees.
9. Claims made that exceed insurance policy limits.
If you invest the same amount of time and care in protecting your income properties as you do acquiring and managing them, you will exponentially increase your long term real estate investment success, and sleep a lot more soundly each and every night.
Happy Investing!
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