If you buy a property with the intention of renting it out, you’ll need to make sure you have the proper insurance coverage. You should have adequate liability insurance to protect the structure from fire and other perils. But what other kinds of liability issues can you have, and are you covered for them? You want to be sure you ask that question, and that you talk to your insurance agent about any risks you’ll be facing by having a rental property. The more you know the more prepared you can be, and the better decisions you can make. It’s always good to be informed. Here are five areas where you’ll want to make sure your liability insurance coverage is strong and ready for your tenants.
1). Are you allowing pets?
Rentals that allow pets need more coverage. Cats, fish, and small animals like mice and hamsters aren’t generally too much of a problem, but they can do damage. For example, cats can tear up carpet and even walls, small animals can chew through cords and wires, and a fish tank can break or fall, soaking your carpet. Most rental agreements require that the tenant keep fish tanks at 10 gallons or less. Some say five gallons. The largest risk when you allow pets, though, comes from tenants who have dogs. Not only can dogs be destructive of your property, they can bite people. That’s where most of your liability comes in. Even though the dog isn’t yours, you could still get named in a lawsuit. You want to make sure your liability insurance has provisions in it for dog bites, so you’re protected and can have some peace of mind.
2). How much is your slip and fall coverage?
When you’re buying a property for rent you need to be clear on who’s going to be using it and how much danger they might have from that use. You can’t always control what tenants do or protect them, but you can make sure that you’re protected if someone is injured on your property. Whether that’s a tenant or someone visiting that tenant, you need coverage for slips and falls. Your insurance agent can advise you of a good coverage amount because every situation is different. The amount you’ll need for a single-family residence is a lot different from what you’ll need for an apartment building, for example. Make sure you have adequate coverage for slips and falls, so you’re financially protected.
3). What’s winter like in your area?
One of the most important aspects to consider when you’re looking at your liability insurance and your slip and fall deductible is what kind of climate you live in. People who live where there is a lot of snow and ice may need higher coverage limits, simply because it’s easier for people to get injured on their property when the weather is bad. While you don’t have to raise your coverage beyond recommended limits just because it’s cold or snowy where you live, you may want to consider doing so. Often the cost of some extra insurance isn’t very much, and the extra protection it provides for you can be well worth the price. In the unlikely event that you get sued because someone got hurt, you want to be able to help them, but still protect yourself financially.
4). Are your tenants protected from financial harm?
When you’re renting out a property you are still responsible for that property. It needs to be insured and you need to make sure the taxes get paid, for example. Still, that doesn’t give any protection to your tenants. It’s important to make sure your tenants know that your liability insurance doesn’t cover their belongings. It’s only for the structure. Tenants who want their own items protected need to get renter’s insurance. That’s generally pretty inexpensive, since it only covers the things they own and doesn’t cover the dwelling they’re in at all. By putting information about renters insurance in your contract, or even requiring it as a condition of renting from you, you’ll be protecting your tenants from financial harm through knowledge and education, not through your liability insurance policy.
5). What if your tenant harms someone else?
Your tenant hurting someone else is an area that you can feel protected from. Even if someone attempted to sue you or your insurance company for their injuries, you really can’t be held responsible for what your tenant does. You are only renting to them, and have no control over their actions. If the injury occurred on your property, though, you may still be named in a lawsuit. Work with your insurance agent to understand the limits of your policy, and consult an attorney if you have questions about your actual liability as a landlord. That way you can make an informed decision as to whether there are policy options beyond liability insurance that you need to consider as you prepare to rent your property.
Being a landlord can be very rewarding, but it can also be stressful. However, with the right liability insurance policy you can have peace of mind and financial protection. That reduces your worries and helps you feel better about your decision to rent your property to someone else. Whether it’s your first rental or only one in a group that’s part of your portfolio, having the right insurance on your rental property is a significant part of being a responsible landlord and ensuring that you have adequate protection for your finances and your property.
2 Point Highlight
If you buy a property with the intention of renting it out, you’ll need to make sure you have the proper insurance coverage.
Rentals that allow pets need more coverage.
