All Greenwich rental property owners know that they need good quality insurance to protect their real estate investments. You just can’t predict what happens to your property; sometimes— hopefully never— disaster strikes. That’s why it is important to have insurance. However, there are a lot of different kinds of insurance, each with its own coverages and limits. That alone can make identifying which insurance you need quite a predicament. Landlord or Investor insurance, landlord liability, umbrella, and flood insurance are just a few examples of what you can get. However, don’t let the number of choices overwhelm you. You must be insured. It’s like a fire extinguisher in the sense that, when you need to use it, you’ll be very glad you have it. Now, different types of insurance are designed to protect different things, learning what purpose each has can help you work out how to best protect your rental property assets with the correct type and amount of coverage.
Unlike homeowner’s insurance, Landlord or Investment Property Insurance‘s main intent is to protect investment property. This type of insurance covers the rental home and usually exterior features, such as sheds or fences. Landlord insurance does not cover your tenant or your tenant’s personal property. This means that if your tenant brought some expensive appliances, furniture, or jewelry into the house, and these things were damaged, the insurance wouldn’t cover them. This is why most landlords ask that their tenants purchase their own renter’s insurance policy and sometimes tenant liability insurance too.
Landlord Liability insurance is different from Investment Property Insurance but is often included. This is due to the fact that this type of insurance covers losses related to damage, theft, or vandalism caused by tenants or their guests; it also covers liability in the event of an injury. This type of insurance is intended not only to protect your rental home but also the financial aspects of your investment as well.
An umbrella policy is simply what it seems to be: broad coverage for a rental property that adds an extra layer of protection for individuals who own property or have an occupation that is prone to lawsuits. Considering being a landlord meets both of these classes, it is worth examining an umbrella policy to protect your assets if you are sued for damages in excess of your other insurance policies. These policies also typically protect the insured against loss of rent or damages to other people’s property or injury caused by others, such as a tenant. It also protects you from vandalism and invasion of privacy— something that may happen to landlords. On top of that, it also covers slander and libel.
To understand how an umbrella insurance policy can help you, consider this example: Your tenant has an accident on your property and decides to sue you for $300,000. He wins the case. Your other insurance covers up to $100,000 max. But who’s going to pay for the rest? That’s when your umbrella insurance policy comes in. It picks up after other insurance, covering the remaining $200,000.
It is quite interesting to note that even an umbrella policy usually does not cover losses to your rental property due to a flood. For many reasons, flood insurance is usually offered as a separate policy that must be purchased through the National Flood Insurance Program (NFIP). This type of insurance typically covers the actual cash value (not the replacement cost) of the physical structure of the home and a detached garage, if any. While many Greenwich property owners assume that they don’t need flood insurance because their property is not located in a “high-risk” area, the reality is that floods can and do happen anywhere, and usually strike without warning. Whether from a burst pipe or an unusual amount of rain, floods damage and destroy homes on a regular basis.
With so many different types of insurance, it’s imperative that you examine your coverage amounts thoroughly and be satisfied that you are not paying for insurance you don’t need, then again, also that the insurance you do have provides the right amount of coverage. Furthermore, acknowledging whether you have the right insurance coverage can be quite mind-boggling except if you have reliable industry experts on your team. At Real Property Management Southern Connecticut, we can help you determine how to best protect your valuable properties and your financial well-being with the right insurance coverage. To learn more, contact us or call us at 203-821-7303 for additional info.
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