As a landlord, you want insurance that’s tailored specifically to protect your rental properties. A Landlord Protection policy, also called a Dwelling Fire policy, gives you choices when purchasing the insurance coverage you need.
Rental properties can be a great investment, especially if you protect your assets with excellent coverage. Make sure that you and your property are covered when choosing a landlord protection insurance policy.
For starters, make sure your property is on the correct type of coverage form. In many instances, landlords will purchase a property, spend a little time fixing it up, then will rent it out after the repairs are complete. This is perfectly fine; however, it’s in your best interest to fully disclose the extent of the anticipated renovations with your agent because a special form dwelling fire policy (which is commonly used to insure residential rental properties) has a couple of key conditions in it:
- While freezing is indeed a covered peril, coverage only applies if you have maintained heat in the building or shut off the water supply and drained all systems and appliances of water. This is obviously a huge problem during the colder months, so pay a little extra to your utility company to keep the heat on in the house. Otherwise, you run the risk of having a large water-related claim go uncovered due to frozen pipes.
- Vandalism, malicious mischief, and theft are all covered as long as the house isn’t vacant. If the dwelling has been vacant for more than 60 days prior to a loss caused by one of these perils, coverage is excluded.
If you plan on taking several months to renovate a property, your property may need to be written with a specialty insurance company until renovations are complete. In many cases, vacant properties are only eligible for basic form coverage (which means you are only covered for a small list of specified perils); however, there are some options in the marketplace to expand the list of covered perils for vacant properties. Once the renovations are complete and a tenant is about to move in, you can put the property back on a standard rental dwelling insurance policy.
In addition, keep in mind that water-related losses such as flood and water backup of sewers and drains are not covered in any type of rental property policy (vacant or occupied), so additional coverage will need to be purchased to properly address these perils.
Lastly, it’s important to protect yourself with liability insurance. Landlord Protection liability insurance options protect you and your spouse or domestic partner against personal injury, wrongful eviction, or wrongful entry as well as other non-bodily injury claims such as libel and slander.
The more assets and exposures you have, like rental units, the more important it is to have adequate liability insurance. I recommend getting an umbrella policy to go above and beyond all of your underlying policies, including your auto, home, landlord, and any recreational vehicles. With an umbrella policy, you can get an extra million dollars or more of liability coverage for only a few hundred dollars a year.
If you’re a landlord or are considering purchasing a rental property, give us a call. We’ll get to know you and your unique risks so we can tailor an insurance package to fit your needs.
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