Common Types of Rental Property Insurance You Should Know About
Are you an avid real estate investor? Are you looking to insure your investment properties? Then you need to familiarize yourself with the different types of insurance available.
Why? For starters, an insurance plan is essential. It’s the only way that you can financially protect your investment properties. It gives you financial protection should the unexpected happen.
Don’t know what kind of insurance you need? Then read our easy-to-understand guide to the types of rental property insurance you must have!
Owner Occupancy Insurance
This is typically the most basic type of rental property insurance. It covers you if someone else becomes liable for damage to the property while you’re not present.
This kind of policy will usually cover your personal belongings as well. So make sure to ask about coverage details before buying it.
Dwelling Fire Insurance
In the event of a dwelling fire, this policy covers your structure and contents. This includes your furniture, appliances, and other possessions.
Dwelling coverage can vary based on the size of your home and the exclusions listed in the policy. But generally, this type of policy will protect you from significant losses.
Property Replacement Insurance
This insurance policy can help cover your costs in replacing or repairing the damaged property. This is if something happens to the property that makes it unusable for rent (like a major flood).
This type of coverage is usually more expensive than other options. But it can be worth it if you have a high-value property that’s difficult or impossible to replace outright.
Rent Guarantee Insurance
One common feature of many rental properties these days is rent guarantee insurance. This gives tenants coverage against any late payments or damages caused by their landlords.
If you’re planning on staying in a rental property for a long period, this coverage can be a valuable safeguard against any issues that might arise.
Security Deposit Insurance
This policy covers your security deposit if you end up suing or getting sued by your landlord. Typically, this policy will cover the full amount of your deposit, as well as any legal fees that may come along with the case.
Make sure to ask about exclusions and limits on this type of coverage before buying it. Not all policies are the same.
Tenant Eviction Protection Insurance
If you’re due to get evicted from your rental property, this is an insurance policy that can help cover some of your costs in moving. Coverage typically includes reimbursement for reasonable out-of-pocket expenses (like relocation costs).
This also includes the legal fees and damages related to the eviction process. This policy is usually more expensive than other options, but can be a valuable safeguard in case things go wrong.
Homeowner’s Policy for Renters
If you’re not renting the property from the owner but from one of their tenants, you may buy a homeowner’s policy for renters. This type of policy will cover you and your belongings if your tenant gets sued or damaged by someone else on the property.
This type of insurance covers you and your possessions if you’re forced to leave your rental property due to a fire, theft, or other major issues.
Coverage can vary based on the terms of your policy. But most policies will at least provide partial reimbursement for damages caused by a covered event.
Rent Transferability Insurance
If you’re moving into a new rental property and want to make sure that your old one gets covered by your current insurance policy, this is an option worth considering.
This type of policy allows you to transfer your current coverage to the new property. This way, you don’t have to start over with a new policy all over.
Landmark Risk Insurance
This type of policy covers your rental property if it becomes a landmark or tourist attraction. Landmark risk insurance coverage includes physical damage to the property itself.
It also covers any loss of rental income that occurs while the property is unavailable for use.
Dwelling Lease Insurance
This type of insurance covers your rental property if it’s destroyed or damaged while you’re still living in it. Coverage usually includes both physical damage (to the property itself) and any loss of rent income that occurs while the property is unavailable for use.
Pet coverage is an important type of rental property insurance that tenants should be aware of. This takes into account the potential damages that can be caused by tenants and their pets while they are living in a rental property. It covers accidents from pet destruction, such as chewing and digging, as well as any other property damage caused by pets.
Pet insurance can also provide liability coverage for any liabilities related to your tenant’s pet. This is if the pet causes an injury to someone else.
The coverage usually comes in the form of financial reimbursement for damages caused. But some policies provide coverage for the pet itself.
Umbrella insurance is an essential form of rental property insurance that you should know about. It provides an extra layer of liability protection beyond the limits of your home and auto insurance policies. This type of coverage can help protect you from a legal judgment that exceeds your current liability coverage.
It’s used when you discover that you’re involved in a potential for financial loss beyond the limits of regular liability policies. Examples include incidents of slander, libel, false arrest, or invasion of privacy.
Umbrella insurance pays up to the policy limit for financial awards and legal defense costs associated with a covered event. It provides peace of mind that your rental property is protected from potentially large financial risks.
Getting Rental Property Insurance for Your Needs
Rental property insurance is a must for any owner, but there are many different types to be aware of. Be sure to research each type thoroughly to determine the coverage you need.
Luckily, some agents and brokers are ready to assist you in selecting the right coverage. Get started today to ensure your rental property is properly protected.
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