What Insurance Should I Have For My Rental Property? An Investor’s Checklist
Investing in real estate is different than investing in Wall Street stocks. Stocks are speculative, and they’re also a “paper asset.” The stocks might go up and down but there isn’t much that can happen to the “financial instrument” itself (especially since they’re stored electronically instead of as stock certificates now). Real estate on the other hand, when done properly, provides steady cash flow and is a real asset… which means something could happen to your real estate.
The cash flow is nice… but you need to protect the real asset (and yourself). That’s where insurance comes in. Insurance is like a “reset button” to help you recover financially from a loss. If you invest in real estate, maybe you’re wondering, “What insurance should I have for my rental property in Decatur, Atlanta Cascade, Collier Heights & Sylvan Hills?”
Here’s a checklist of insurance that you may need:
Checklist: What Insurance Should I Have For My Rental Propety?
There are many possible insurance products that can benefit you but the primary ones are below. (You may choose to purchase the relevant ones separately or you might want to ask your insurance broker if they have “landlord’s insurance” since some insurance companies will package the right ones together for your convenience.)
Property Insurance. Property insurance should protect you financially from many of the events and natural disasters that may damage your property. All policies are different but you might get property insurance that covers you for fire, lightning, wind damage, etc. If you live in an area prone to a certain type of natural event (such as floods), you may need to acquire an additional “rider” for that special situation. You pay a little bit more, but make sure your insurance covers renter’s loss. Renter’s loss if something happens to your home like tornado tearing the roof off and you can no longer rent it until it is repaired, you’ll continue to receive rent payment from the insurance company.
Liability Insurance. If a tenant or visitor injures themselves on your property, they may sue you to help pay for their medical bills and loss of employment income. Liability insurance helps to protect you from the financial burden if a lawsuit goes against you. Don’t scrimp on this insurance as you can usually get about $1 Million in coverage for around $500/year in the state of Georgia. Keep in mind your credit score and having not filed any claims will also help keep your policy rate low.
Tenant Insurance: Tenant insurance isn’t something you need to get for yourself but we’re mentioning it here because it’s something you should urge your tenants to get. Tenant insurance is insurance for tenants that will cover any financial loss of their belongings. Cozy.co offers renters insurance that tenants can sign up to use when they are paying your rent. Cozy is the first complete modern service for independent landlords and renters that provides online rent payments, rental applications, tenant screening, and more.
Here’s How These Insurances Work
As an example, if a fire starts, your property insurance may cover the repairs to the property, the liability insurance may cover you if the tenant chooses to sue you, and the tenant insurance will cover any damage to the tenant’s belongings.
Get The Insurance You Need
There may be other insurance to consider as well, including insurance for your business in case you are injured and unable to work, or there might be other insurance available (such as those through your credit card or bank) to cover bills if there’s a loss of income.
Insurance needs are different for every situation; we’ve covered the 3 basic insurances above to get you started but you should always talk to an insurance professional who can assess your needs based on your individual situation.
If you want to get an introduction to an insurance broker we trust and work with, click here now and enter your information, or phone us at 678-435-9991 to get in touch
The BiggerPockets Guide to Landlord Insurance
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