by Jillynn Stevens, Ph.D., MSW
Leasing residential property can be a great source of passive income, but to make the most of your revenue stream comprehensive insurance protection is key. Having the right knowledge and some basic management skills are essential, but even seasoned landlords might be missing out on some crucial coverage. Yes, you can require your tenants to carry renter’s insurance, but the bulk of the insurance side of things is squarely in your court.
But what kind of insurance do you need, and is it really that big of a deal if you skimp on one of them? There are five (and potentially six) types of insurance that all landlords should have to protect yourself, your property and your tenants. It’s possible to save a little by bundling packages together, and a little shopping around can do wonders when it comes to saving on the bottom line.
Even though you may own the property you’re leasing, your homeowner’s insurance won’t cover you. Keep in mind that solely by leasing your property, you’re increasing the likelihood that it will be damaged-even the best tenants won’t take care of your property in the same way you would. A comprehensive landlord rental policy is crucial, and basic (or basic plus) coverage is a way to protect your investment.
1. If you opt for basic, you have (no surprise) the “basics” covered, like the building itself, swimming pools, garages, sheds and any other structures on the land. This does not cover the contents of the home-which you need if you’re offering furnishings.
2. Basic plus is wise if you have valuable things on the property from tools to furniture. Malicious damage, such as vandalizing from angry tenants, is also covered.
Water and Legal
3. “Water coverage” can vary slightly depending on where the rental property is. This may also be complemented by flood coverage if it’s available in your area-but water coverage and flood coverage are two very different things and you need both if you’re in a risk area. Water coverage takes care of damage from burst pipes, well issues, plumbing snafus and anything else beyond natural disasters.
4. At the same time, you need to stay legally protected. What happens if your tenant sues you (it happens), they don’t pay rent or just ignore that eviction notice? You’re going to want legal representation, and going to court is expensive. Having legal coverage makes trudging through these murky waters much easier.
Protecting Your Investment
5. As a landlord, you’re an entrepreneur and your rental properties are your bread and butter. Loss of income coverage is essential because your properties are your business. It’s easy to lose money via damage, but loss of income coverage will pay your income-up to a certain amount-while the property is being repaired.
6. Finally, if you’re leasing condos, condo insurance is a smart move. There’s more to cover, such as general building insurance. Having special condo insurance can make sure that any improvements to units are covered and personal liability is taken care of.
A lot of people dive right into being a landlord without assessing their risks and this is a big mistake. Make sure you’re properly covered before handing over the keys so that you’re set up for a safeguarded business arrangement.
Jillynn Stevens, Ph.D. is a writer with a vast array of subject matter expertise. Along with publishing articles targeting consumers and small businesses, she researches, writes and publishes reports on various public policy issues.
This article is written on behalf of Real Property Management Professionals, your source for useful property management information and top notch services. See more at www.contactrpm.com. You may just want to have them manage your residential properties with an office in the Seattle, Washington area.
Dr. Stevens works for Be Locally SEO.
Article Source: http://EzineArticles.com/?expert=Jillynn_Stevens,_Ph.D.,_MSW
American Apartment Owners Association offers discounts on products and services for all your property management needs. Find out more at www.joinaaoa.org.