The process of going from being a homeowner to a real estate investment/landlord is an exciting time. Not only are you working towards creating an extra revenue stream for your income, but you’re investing in what has historically been one of the best places – real estate!
When it comes to investing in real estate and being a landlord there is a lot to know and a lot to consider for liability purposes. In this article, we’ll discuss the ways to close the gaps with your insurance on your investment property.
Get a landlord insurance policy
Landlord insurance will insure your Dwelling/rental property as well as offer additional coverage for items stored at the property such as:
- Additional buildings on premise such as sheds or garages
- Equipment like tools, washing machines or other appliances used by tenant
In addition to property damage, landlords or rental property owners may also face legal ramifications for events that take place on the property they own. Having additional coverage for Legal Defense may help pay for legal fees from lawsuits like:
- Libel or slander
- Accidental Damage
- Wrongful eviction
Get an umbrella policy, or consider increasing your liability limit on your umbrella policy
Being a landlord comes with an increased liability exposure. You can protect yourself with above and beyond insurance coverage in the form of an umbrella insurance policy to increase your liability limits that you purchase.
Think your liability limits are enough? Take this recent claim settlement:
A renter had notified the landlord that the boiler in the rental property was acting up and the landlord didn’t act quickly enough. Shortly after that call, a toddler severely scalded themselves and required months of painful skin grafts and therapy. The attorney settled with the landlord for the policy limits of $3 million.
Eliminate dangers around the property to limit your exposure
When you’d looking to eliminate liability exposures around a property, check some of these items:
- Stair railings – check for loose or rotten railings inside and outside of the home
- Trip hazards – walk the property and eliminate any large edges where someone could fall or trip
- Swimming pools – if your property has a swimming pool, these pose major dangers to children. Be sure there is a fence with a self-closing gate that locks behind the person entering to stop curious neighborhood children or unattended children from entering the pool.
Owning investment property can be very rewarding, but do be aware of the additional risks there are. Fully eliminating your liability exposures is not ever a possibility, but mitigating your risk is. This is where we can help you come up with a comprehensive insurance package that protects you and your rental property. We would recommend scheduling a time to speak with one of our licensed agents to find you the right coverage and company for your rental property.
More and more people are taking advantage of the extra income they can make by doing an AirBnB, VRBO or other rental out of their homes. This is a great way to save money for college, pay off your mortgage, pay for a remodel or just make extra money for your savings. But, before you commit and jump into it, consider the risks associated with being a landlord.
