Insurance For Landlords - Your Guide To Rental Property Insurance.

Do you own or plan to own a rental property? If so this guide will show you the most important aspects of landlord insurance and some often overlooked coverage. Let's face it; you don't own a rental property because you enjoy dealing with tenants. Your bottom line is profits and asset appreciation right? The cost of owning a rental property can be overwhelming when you consider the mortgage payment, insurance and unexpected maintenance. If done properly you can have a profitable source of income for years to come but there are risks involved.

Being a landlord involves many risks including asset depreciation, destructive tenants and unexpected maintenance. Some of those risks can be contained with a proper landlord insurance policy. Most people don't understand the difference between a standard homeowner's insurance policy and a landlord policy. While most of the coverage remains the same there are distinct differences between the two.

When I sold insurance most of my customers did not understand why they needed to have a different policy when renting out their home. This is a common issue when someone decides to rent out the home they have been living in for sometime. Initially they purchased homeowners insurance but now they have tenants in that home so what do they need. The number one reason why you want to get a landlord insurance policy is so that you are properly covered in the event of a claim. If you don't change the policy when you begin to rent the property any claim can be denied by your insurance company for failure to notify them of the change in status.

Here are two coverage's that a landlords Insurance policy includes that is vital to your rental property business:

Liability Protection

While a standard homeowner's policy includes liability protection it is not meant for landlord liability. Take for instance a tenant who causes a fire to your condo unit which damages two other units attached. The other condo owners can file suit against you for the damage to their property. If you don't have a landlord policy your insurance company may not cover you based on the intended use of the condo. Most landlord policies will provide anywhere from $100,000 to $1 million in liability protection. Always opt for the higher coverage as it is only a few dollars more per year.

Loss of Rental Income

Most landlords rely on having tenants paying each month in order to afford the mortgage on a property. If the unit were to become unlivable due to a fire your tenants would have to move out and you would not have that rental income while the unit is being fixed. This is where loss of income coverage is so vital to your business. You can be reimbursed for any loss of rental income you suffer up to your policy limit during the time it takes to repair or rebuild.