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There are fixed expenses that you will pay when you own real estate. The tenant lease agreement that you have written for your property will usually determine most expenses. You could be paying for all utilities, repair work, appraisals and extermination costs. These costs are always separate from your standard loan repayment expenses. One expense that is higher with investment property is insurance. The area where you choose to purchase a property can and will affect the premiums that you pay. You can learn ways how to get reduced insurance rates for investment property to help lower your premium costs. Lowering your insurance cost will let you keep more of your rental property income.
How to Reduce Insurance Premiums for Investment Property
Get Your Credit Report
The first thing that you can do to reduce the cost of insurance for your investment property is to obtain a copy of your credit report. You could be surprised at what you find. Not every person monitors a credit report for accuracies and inaccuracies. The first thing that an insurer will do is pull your credit report when putting together a price quote. You can review your report prior to applying for insurance to make sure that nothing is out of the ordinary. You could find that your personal information, employment information or paid off accounts are not accurate. These are all factors that could raise the cost of insurance premiums on your investment property.
Know How Your Property is Constructed
The materials that were used to construct your investment property could make the insurance rates go up. As an example, in states prone to hurricane damage like Florida, safety features installed on the homes could make the rates do down. It is when a home is not prepared for a disaster that it will cost more to insure. Some insurance companies require that homes in higher than average severe weather regions be bolted to the foundation and have other safety guards in place. Making sure that your investment property is properly equipped to lessen damaging effects of weather can reduce the annual insurance premiums you pay.
Maximize Available Discounts
Insurers know that money is what fuels their business. You could be eligible for discounts with your policy and not know it. Agents make commission on how much the premium costs are and make less when rates are reduced. It is simple to ask what discounts that you could qualify for when you complete your initial application. Simple things like having a fire extinguisher, security system and a smoke detector can seriously reduce premium costs. Most agents aren't willing to share these discounts with you and doing your research can help you locate discounts that you qualify to receive.
Higher Premiums = Lower Monthly Payments
You might be thinking that your goal is to pay less for insurance and it is. What you must understand is that high insurance premiums come at a lower monthly cost. When insurers offer you more protection than what you need, they reward you with a lower monthly payment. Insurance is only necessary if you need to use it and planning for the worst is essential. Not having enough insurance could cost you more than the small amount of money you pay to be over insured at a price you can live with.