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Landlord Insurance Checklist
Below is a list of items each landlord should review with their insurance agent every year. Most landlords set January as the month to review budgets and plan for the year ahead. This is a great time to try to save money and get better protection at the same time.
Dwelling Coverage – This protects the structure of the house you rent including anything directly attached to it. It is a good idea to get estimates from builders in your area for reconstruction cost to ensure proper coverage. Most insurance companies will increase this coverage by inflation each year but if you add-on or remodel your home be sure they have this new information.
Landlord Liability Coverage – It makes sense to get the maximum amount of liability coverage since it usually is inexpensive to increase. Expect $1 million in landlord liability coverage to add another $30 per year to the policy. This is very cheap when you think about the amount of protection it provides. In the event you have assets greater than $1 million you should consider getting an umbrella policy which will protect you from liability claims on all your policies.
Loss of Rents Coverage – If your tenants ever have to move out while the home is being repaired for a covered loss this coverage provides the loss of rental income up to one year. Some companies offer longer periods of protection but the key is to take the current annual rental income and make that the loss of rents limit. Most tenants will come back to your property if they know you have corrected the problem and other to break the lease during reconstruction.
Renters Insurance – None of your tenant’s personal property will be covered on your landlord policy so make each tenant have renters insurance while they rent from you. They will be happy you informed them of this in the event something is stolen or damaged by a covered loss. Have a required level of coverage such as $20,000 personal property and $100,000 in liability. This will ensure your rental property is covered in the event they cause damage to the unit. Send your tenants the following link to get renters insurance quotes.
Proper "Loss of Rental Income" Coverage Limits:
Be sure to have adequate coverage for loss of rental income on your landlord insurance policy. Most policies will come with a percentage of dwelling coverage for loss of rental income but this can sometimes not cover your full income during a time of loss.
Calculate how much rental income you bring in each month and multiple it by 12 months. This will give you the minimum level of coverage you will need in the event your tenants need to move out during repairs.