If there is one thing that the year 2020 has taught all of us, it would have to be this: BE PREPARED FOR ANYTHING! We never know when life is going to throw us a crazy curveball so it is always best to assume that it probably will at some point.
There is a popular saying that goes “It wasn’t raining when Noah built the ark.” This is exactly the kind of mindset that we need to adopt if we are to survive anything from a pandemic, a financial crisis, to a natural disaster. Luckily, there are ways to soften the blow of such circumstances. What may appear to be just an added cost, for now, might just be the very thing that saves you from financial ruin in the future.
Our recommended insurance coverages for your Landlord Policy:
1. Dwelling Coverage
Dwelling coverage is for the protection of the primary structure. Most companies offer Replacement Cost Value (RCV), which is preferred. Some companies offer Actual Cash Value (ACV), which is a depreciated amount based upon the age of the home. Also, be sure to update the amount of dwelling coverage on a regular basis (every 1-2 years).
2. Other Structures Coverage
Other Structures protection is for manmade detached structures, such as garages, sheds, outbuildings, and fences.
3. Personal or Premise Liability
VERY important! This coverage protects the Landlord against lawsuits in the event someone is injured on the property. This is an affordable coverage to purchase and our insurance agent suggests the max coverage available, which is typically $500,000.
4. Personal Property
Coverage for anything owned by the Landlord that will remain in the rented structure. Examples include appliances and personal property belonging to the Landlord that might be stored in the home.
5. Loss of Rent (Optional)
This is a coverage that can reimburse the Landlord for lost rent because of a covered claim. For example, if the house burns down and takes 12-months to rebuild, the Landlord may be able to recuperate lost rent by adding this coverage.
6. Vandalism (Optional)
If a tenant or other person vandalizes the property.
7. Building Codes (Optional)
This will provide expanded coverage to the structure in the event items cost more to replace due to changes/updates in building codes. For example, drip edging around the perimeter of your roof wasn’t required in the building codes 20-years ago but it is now.
8. Loss Assessment (Optional for Condo, Townhome, Duplex)
This protection is a MUST for properties that are part of a homeowner’s association. In the event of a claim, the HOA’s deductible is typically spread out across all owners. These deductibles tend to be very high, and Special Assessments are typically charged to owners as a result. Loss assessment coverage is an add-on that helps a Landlord pay the Special Assessment. We recommend that you get a copy of the HOA master policy to discover what amount of coverage is appropriate for the property.
9. Sewer / Water Backup (Optional)
Amount of coverage available is typically $5,000-$10,000.
10. Renters Insurance (Purchased by Tenant)
A renter’s insurance policy tends to run only $10-$35 a month, and covers the tenant’s personal belongings, loss of use (if they are displaced from the dwelling by a covered claim), and liability.
Talk to your insurance agent to find out how you can best protect yourself and your investments from potential misfortune. Lastly, a special thanks to Chris Lucio with Allstate Insurance for providing this information!