Although it is great fun to make money on a rental property, it is important to understand how to protect it.
But here's the thing:
Most people do not know that as a landlord, a homeowner's insurance or a rental insurance will protect your property from loss.
This is where rental property insurance comes into play.
In this post today I will help you understand what landlord insurance is also like how it works and when you need it.
What is landlord insurance?
landlord insurance works almost like a homeowners' insurance in that it covers you against damage to your building and protects you from liability issues if someone is damaged on your
It is often called a purchase for renting homes and also provides extra protection because it treats your rental properties as a company.
What does rental value insurance cover?
Your landlord insurance covers the building and the property, but extends the liability cover to ensure that you do not have to deal with legal fees.
There is also income loss protection if you cannot rent a room or building if it becomes uninhabitable for a certain period of time.
A large landlord insurance should have three basic protections:
Property damage coverage will cover the property if the property or furniture is damaged by:
I recommend that you go to a policy that offers compensation cost or compensation value coverage instead of actual cash value coverage.
We created a post about actual cash value against compensation cost coverage if you want to learn more about the differences.
Lost rental income or rental insurance:
If your property is put in a position to be uninhabitable from things like:
Your rental insurance covers the rental money that you would miss if a tenant currently occupies the property.
Liability protection works as it does with homeowners' insurance, it covers the medical or legal costs that may arise if a tenant or visitor suffers an injury due to a maintenance problem such as:  icy walkways
How much does rent insurance cost?
On average, rental value insurance costs about 25% more than a comparable homeowner's insurance according to the Insuran information institute.
However, the additional cost is definitely worth paying to get the extra coverage.
There are several factors that will determine what your rental property insurance will cost and they are very similar to what determines the cost of homeowners and tenant insurance.
These factors are:
One of the best features about rental value insurance is that it can be written off as a business expense on your taxes.
It is one of the few ways that homeowners insurance is deductible.
After talking to the guys at Buttonwood Property Management along with recommending landlord insurance they also recommend landlords to compensate for capital costs or improve their property, tools, property losses.
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Homeowners insurance against landlord insurance
And here's the thing:
Personal liability insurance does not extend to business, nor personal umbrella policy.
This means that if your tenant is injured when you rent your property, a basic homeowner will not cover you for it.
Landlord insurance against tenant insurance
The landlord insurance actually has more in common with home insurance because it covers the building itself.
However, tenant insurance is still an important part of reporting.
Most people assume that their landlord policy covers them; However, it can not be further from the truth.
Landlord insurance does not cover your tenants' personal property in the event of a covered loss.
And although tenant insurance is not required by law in most states, a landlord may require you to have coverage before they will rent to you.
Imagine a property burning down, you losing your home and your tenant losing all their belongings.
Your landlord insurance covers the cost of their rent and start rebuilding your property but they will be left with nothing.
To avoid this headache, it is best to make sure that your tenants have a tenant policy, it will protect you both in the end.