What kind of insurance do I need for my rental property? Many new real estate owners wonder, “What kind of insurance they need for their rental property?”
Insurance is an important financial tool in the portfolio of every investor, and for the real estate investor, it is especially important. Regardless of the equity in your property, or the margin of profit received on rents, a rental home is worth nothing if it burns down and it wasn’t insured.
To properly protect your real estate assets, you’ll need to obtain a fire policy on each of your rental properties.
Research the basic details about your property. You’ll need to know, at a minimum, the age of the property, the square footage, location, its foundation type, the type of roof it has, the heating system, and whether or not it is located within a flood plain.
Shop around to find the best price on a fire policy for your property. A fire policy is an insurance policy that is specifically for rental units. It differs from a homeowner’s policy in that it only covers the structure of the home, and not any personal property located inside.
Although it covers less, a fire policy will often cost a little more than a homeowner’s policy would, because renters tend to be less careful about taking care of a home than an owner-occupant would be. Make sure to contact several insurance companies for quotes.
A renter’s policy is inexpensive and will reimburse them for property loss due to fire, theft, or other disasters. If your property is damaged as a result of tenant fault, you may also be able to receive compensation through the renter’s insurance policy.
Obtaining an adequate fire policy is an essential task for any savvy investor wondering, “what kind of insurance do I need for my rental property”. With just a little time, knowledge, and research, you can ensure that your investment will be protected in case of catastrophe.
Before you agree to any insurance policy, make sure that you clearly understand its coverage. If you need time to read through the paperwork the agent provides, ask for it.
Also, do not be afraid to ask the tough questions or even the ones that you already think that you know the answer too. It is better to know now then to have to find out something is not covered under your insurance policy later when there is a problem.