Becoming a landlord is quite an undertaking because it entails wearing many hats. The individual must know how to make common repairs and quickly get up to speed regarding tenant-landlord rights and responsibilities. One of the first things a new landlord should do is obtain landlord’s rental property insurance.
The benefits of insuring a rented dwelling include protecting the structure against damage and protecting the landlord in cases of legal or personal liability. The policy covers the rented structure, other private buildings including a shed or garage, and any personal items that are stored on the premises or provided by the landlord. A landlord can purchase a policy for various structures such as a single or multi-family building or a condominium.
Standard policies include provisions for liability, lost rental income, court charges, and the cost of legal defense. Liability protection covers the landlord during lawsuits related to property damage or bodily injury. This coverage may include a medical expense provision for people who are injured while on the premises. There is additional optional coverage that will protect the landlord in various situations.
Disaster can strike at any time, making the structure uninhabitable on either a permanent or temporary basis. Landlords who rely on rental income know that the last thing they want to worry about is how to pay their own bills if this cash flow ceases. Coverage for loss of rental income provides restitution to the landlord while the structure is repaired or rebuilt. Optional coverage, like water backup protection, is offered by some carriers. Water backup provisions protect landlords when the home or contents sustain damage resulting from water that backs up into the property.
If a lawsuit is filed by a tenant or visitor, the landlord can face many out of pocket expenses. Some carriers provide financial assistance for attorney fees, legal document fees, and other lawsuit-related expenses. It is helpful to have a carrier that is always reachable via telephone should an emergency, claim situation, or lawsuit-related question arise. When the structure is burning, the landlord does not want to wait until morning to file a claim.
Before landlords rent their property to tenants, they should purchase a rental property insurance policy. This coverage includes protection regarding liability, legal defense, court fees, and loss of rental income. The landlord may opt to increase the limits of the standard policy or purchase optional coverage. Having a comprehensive policy with sufficient limits protects the landlord from financial ruin.
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