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You might own a property or are considering purchasing one to relish in the cash flowing potential each month. Owning a property and depositing rent checks are excellent benefits, but they can only be realized if your investment property is in excellent condition. Age of an investment property is one of the factors that should always be considered when you go to purchase an insurance policy. Just like auto insurance, no two policies are ever the same and often certain inclusions are added by an insurer upon request. Knowing how to choose the right insurance for your rental property helps you in more ways that you think. Paying insurance premiums is one of the biggest expenses that you make each month and paying for the right coverage will protect you in the event of a problem with your turnkey investment property.
Types of Insurance Coverage
Insurance coverage is not a broad term. It is very specific and insurance companies never payout money for damage or loss unless these losses were included specifically by you upon signing the policy documents. There are many types of insurance coverage, but a few are most common in the rental property industry.
• Basic Policy
• Additional Perils Policy
• All-Risk Policy
• Premier Policy
The biggest differences between each policy are the amount of coverage that is offered if a loss occurs and what losses are covered in full. A basic policy protects against the natural loss due to wind, hail, lightning, vandalism, fire and personal liabilities. There are generally 11 areas that are written into a basic policy to protect your investment property. Additional perils policy allows you to add additional protection for losses that are not included in a basic policy.
Additional losses can occur to the possessions inside of your property. A leaking pipe that has leaked without warning for extended periods of time and causes water damage could be added as an additional peril because it is normally not covered in most basic policies. The all-risk policy is a blanket type of policy that is designed to protect against most natural disasters or other unforeseen circumstances not written into basic or additional perils policies. If you own property in areas prone to hurricanes or flooding, checking to be sure these are written into an all-risk insurance policy will protect you.
A premier policy is similar to an all-risk policy and individually names the type of losses that an insurer is willing to provide a monetary subsidy for if a loss happens. Any event that is not specifically named in a premier policy can be added as an exclusion to give premier protection against loss or personal liability to you as a property owner.
Saving Money on Rental Property Insurance
It certainly helps to get quotes from more than one insurance company and in several different states. The insurance business is competitive and rates can be lower if you can compare different quotes. Reading the documentation carefully or consulting with an attorney can help you better understand the coverage and how you will be protected if an unforeseen event causes loss or damage at your property. Taking all the measures you can prepare for in advance will help you to save money on rental property insurance and choose the right insurance for your rental property.