Protecting your Visalia rental investment needs to be a priority. When you think about the amount of money, time, and other resources you’ve invested…it would be disastrous to leave it in danger or under-insured.
It’s unpleasant to think about worst case scenarios. No one wants to think about an earthquake leaving your rental property damaged or a fire burning it to the ground. A comprehensive insurance policy that covers losses due to fires, break-ins, and severe weather incidents can protect you. The right insurance allows you to rebuild from even the most unimaginable disaster.
What kind of insurance do you need? It really depends on the scope of your portfolio and its value. At the very least, you need a policy that covers your property’s structure, your own liability, and any potential loss of rent due to a loss over which you had no control. You’ll also need your tenants to carry their own renter’s insurance.
Landlord Policies are Not Homeowner Policies
Like homeowner’s insurance, landlord insurance provides coverage for the home itself and other structures on the premises. While both types of insurance are similar, there are a few key differences. For example, homeowner’s insurance policies typically cover the personal property of an owner who lives there, such as furniture, clothing, and computers. However, a landlord insurance policy only covers the structure and its systems.
Since landlord insurance does not cover personal property owned by tenants, we always recommend that tenants carry renter’s insurance.
If you’re renting out a property that you once lived in yourself, make sure you convert from a homeowner’s policy to a landlord policy. If you don’t, it’s possible a claim might get denied. Talk to your insurance agent to make sure all of your new requirements as a landlord are met.
Liability and Landlord Insurance
Liability protection is essential. If an appliance catches fire or your back deck collapses and a tenant is injured, you may face a lawsuit. When you are sued or a claim is filed against you, the insurance company will defend you against any liability. They’ll also pay any damages that are awarded to the complaining party.
Make sure your policy anticipates all of the potential liability and risk that comes with renting out a property in Visalia. You cannot be too careful.
Consider an umbrella policy if you own several rental homes and it makes sense for you. An umbrella policy takes your normal policy and adds an umbrella, or up to a million extra dollars of protection. The cost of extra coverage is usually pretty cheap. Just remember that the umbrella policy only increases your liability coverage, not the insurance for rebuilding your property. That’s an important distinction.
If you’re working with a Visalia property management company, you’ll have an extra layer of coverage. You should also include your property manager as an additional insured so that a unified defense can be in place in the event that there is a lawsuit or a claim against you.
Loss of Rent Coverage
When you’re renting out your property, you may have to pay for your renters to stay somewhere else while the property is being repaired or rebuilt. You’ll also have to cover your mortgage payments, so make sure you have a loss of rent inclusion on your insurance policy.
Renter’s Insurance for Tenants
Renters insurance benefits your tenants because it covers their personal belongings. If a first-floor unit floods and their electronics are damaged, they’ll need renter’s insurance to cover the replacement cost. There’s also a liability element to renter’s insurance policies. If your tenant causes damage, your property insurance would cover it, but if it’s the tenant’s responsibility, they should be held accountable by paying for it with their own policy. This will keep your premium lower and your claim report clear.
Would you like to hear more about how the right insurance can protect you and your Visalia investment? We’re happy to tell you more. Contact our team at The Equity Group.