We offer up a lot of landlord tips on our blog, but this subject is perhaps one of the most important for your long term success and financial protection: Property Insurance Policy Basics. As a landlord, it’s your responsibility to ensure your property is protected. If you’re new to property management, you may not realize that your standard homeowner policy doesn’t protect you against damage incurred when you rent the property out. If you aren’t careful to obtain the right policy, it’s very likely that your claim will be denied. This can be a ruinous situation for a landlord.
Renting Out Your Property
One of the major considerations when you’re renting out your property is to ensure any personal property is covered. This is sometimes covered in a Renter’s Policy, which you can require of your tenants in order to mediate some of your costs. This policy will protect any personal property on the grounds up to a certain dollar amount (often $25,000), and is relatively inexpensive. We recommend including a stipulation that Renter’s Insurance is required on your basic rental application form.
Beyond personal property, it’s obviously essential to insure the structure itself. This is otherwise known as “dwelling coverage,” which goes into insuring damage to the overall structure of the building. Speak with your insurance provider and review your local laws and regulations to make sure you have the right sort of coverage for a rental.
Once the structure and personal property are covered, you can expect to add on other relevant coverage to your base policy. In most cases, coverage for flood, fire, or “act of nature” related damages are not included in the core policy. We highly recommend including coverage for floods and acts of nature, especially if your property is in an area with even average risk. These policies cover damage from hurricanes, tornadoes, earthquakes, and even some human-caused damage.
When you become a landlord, you must think like a business owner, because that’s what you’ve become. Business owners know that they need medical and liability coverage in the event that they’re sued by a tenant or visitor to the premises. An errant lawsuit can cause serious financial burden to the uninsured, so consider liability policies.
Also consider rental default insurance. This will protect you against non-paying or evicted tenants and any losses you incur due to their non-payment. In order to spare yourself the trouble, we highly recommend tenant screening to uncover financial information and previous evictions for potential tenants.
We offer a number of very helpful screening packages for new and experienced landlords. Depending on your needs and number of rentable units, we may need to perform an on-site inspection to confirm a separate home office, locking file cabinet for properly storing applicants’ report information, and an acceptance of terms of 25-page agreement for service. We also offer TSC RentalConnect for an unlimited number of properties if you can’t manage an on-site visit. These packages will offer you all the peace of mind you need, whether you opt for a mini or full credit check for your tenants. For more information, please contact us anytime!
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