Rental Property Insurance Is Essential For Your Real Estate Rentals. Here's What You Need To Know About Insuring Rental Properties...
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Hi, this is Frank Chen with REIClub.com, the only site you need as a real estate investor. Today I've got quick video on rental property insurance.
Intro to Rental Property Insurance
The type of insurance coverage landlords need falls under the umbrella term "property and casualty insurance". We also encourage Landlords to look into Liability insurance, which i'll cover a bit later in the video.
Homeowners insurance mainly focuses on the coverage for the contents of the house, as a Landlord, you don't really need that. You need rental property insurance.
Rental property insurance policies are written for structures that are four units or less. Anything above that, becomes a commercial risk, which requires a commercial policy..
The policy is written as a package policy, meaning that it covers a number of what insurance companies refer to as "perils." These are things like...
- Fire, Hail theft, tornado, hurricane, wind, and water.
- Also covers detached structures on the property like a garage or a storage shed.
Important to have the appropriate rental insurance
Insurance companies assume... (some items require liability insurance in order to be covered)
- the risk for damages to your property
- Covers you against any injuries or accidents that may occur (Note: The Landlord is liable if he is negligible. So anything, that you as the landlord are supposed to fix, if it causes injury or an accident, you are responsible.)
- Covers legal fees
- Loss of rents
- Tax Deductions -
Note: What is listed is not guaranteed for all policies.
Limitations when insuring rentals
- Fire - only landlord property is insured, not tenants
- Limitations on what contents can be insured?
- Clauses for theft
- Does not cover earthquakes - separate policy
- Flooding - natural disaster
Note: Just be sure to consult with your real estate insurance agent on the specifics behind your policy and the limitations.
Selecting an Insurance Company for Rental Insurance
- Price is important - avg $800 for the year
- Legitimate and creditworthy
- Contact state's insurance department to make sure the company is licensed
- Financial strength - Moody's standard & poor's
- Ask for referrals - proven track record
- Check out
- service reps
- speed with which the claims are appraised,processed and paid
- overall satisfaction
To reduce risk
- Insist that your tenants acquire renters insurance - low cost policies
- Periodically, make sure the fire extinguisher is working and the tenant knows where it is
- Show the tenant where the main water valve is, AND how to shut it off.
- Semi-Annual inspections - also check air filters
As a real estate investor, Landlord, it is your responsibility to protect your real estate investments. Especially, when you have tenants. Not every property will need the most expensive coverage, so before spending several hundreds, or thousands of dollars on rental property insurance. Take the time to educate your tenants, and research for the best type of policy or coverage for your real estate investment.
Again, this is Frank Chen with REIClub.com. Please take the time to leave your comments for this video below and please subscribe to our YouTube channel so you'll be automatically notified when we upload more quick video tips for you. Take care and good investing.