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What insurance do I need for my rental property?
If you’re converting your primary residence to a rental property or you’re buying a new rental property, you’re going to need to think about insurance. It’s a very important part of having a successful rental property. We’re going to talk about the two types of insurance that you really need to have in place before you have a rental property.
The first one we’re going to talk about is landlord policy. So, again, if you’re living in the property now, you need to call your insurance company and talk to your agent and say, “I’m going to be renting out my home, and I need to convert it from primary residence policy or homeowner to a landlord policy.”
This is going to cover things liability related, loss of rent, if there happened to be a fire in the property. Let’s talk about worst case scenario here, right? A fire where it’s no fault of anybody’s, and it falls under your liability policy. Well, that liability policy could also have a loss of rent policy.
So if it takes six months to get repaired or rebuilt, who’s going to be paying your rent during that time? A landlord policy with loss of rent rider policy could cover that rent for you, so it’s really important to have that.
If you’re buying the property brand-new, or, excuse me. You’re buying the property. You’re not living in it currently. Talk to your insurance agent, and tell them the same thing. This is a landlord policy that you need to have in place. It has special provisions for a rental property.
The second one is to cover things that go above and beyond your landlord policy. Oftentimes with the liability coverage, you have a lower limit. For an umbrella policy, which will cover above that, is for worst case scenarios such as lawsuits, injuries, things where the tickets can add up to 500,000, 600, a million, and even up to two million dollars. We recommend that for an umbrella policy to cover some of those worst case scenarios that most likely will never happen but you just don’t want to be caught without a policy, we recommend a minimum of a million dollars because the difference from 500,000 to a million really isn’t that substantial, and then additionally, the difference between a million and two million is also not that big of a difference.
Go for the two million in coverage just to make sure that you’re covered for your property so that you can rest easy at night knowing that for your rental property you have both the landlord policy and the umbrella policy in place, ready to go, so that if something happens, you’re covered and you’re taken care of. Hope this is helpful for you. If you have any questions, feel free to reach out to us. We’re happy to help.