About landlord insurance, you have options to customize your policy, and you should. You can be confronted with optional plans and riders, so how do you know where to spend and where to save?
Here are some guidelines to help get you started.
This article offers general advice. Speak to an expert to get help for your specific situation.
When the time comes to renew your insurance, be sure to shop around. Make sure the company has a stellar reputation and excellent customer service. Insurance companies need to compete against each other. If you have a large portfolio of properties, try to use that as leverage for a better deal.
Higher deductibles mean that you will pay a higher price when you do have to make a claim, but your monthly premiums will be lower. If you are used to handling smaller expenses yourself, this may be a good option for you. You can enroll in a higher deductible plan with a better rate. With that, when you do file a claim you’ll be responsible for a larger chunk of the total price.
Don’t skimp on natural disaster coverage
Examine your local risks, to see whether you will need extra coverage for natural disasters. For coverage of a flood event, be sure to cover any possible causes. Do you live in an area where you are at risk for more than one type of weather event? Be sure to cover them. If you should get hit with more than one catastrophe in a short period of time, you do not want to be paying for all of the repairs out of pocket.
Don’t shortchange your replacement value
Having full coverage means ensuring your plan, your deductible, and your insured amount are all appropriate. During the housing crisis, many landlords were able to pick up properties at discounted prices through short sales and foreclosures. If you purchased a property well below market value, be sure that your coverage is insuring your replacement value, not just the amount that you paid.
Liability is essential coverage
In a litigious society such as ours, liability coverage is essential. If an injury or accident occurs on your property, there is always the chance that they will try to collect from you. If your insurance is comprehensive, you can at least rest easy knowing that it will be covered one way or the other. Umbrella coverage can offer additional safeguards and can be structured to cover all of your properties.
Turning coverage off and on
In some areas, landlords may opt in and out of disaster coverage depending upon whether those storms are in season. Most insurance plans have a waiting period before the coverage kicks in. Also, the onus will be on you to remember to manage these accounts. If you are considering this route, you may want to have a discussion with your agent to negotiate the price before playing roulette with your coverage.
While there are areas where you can save on insurance, these savings can come at a cost of time and peace of mind. Before you skimp on insurance, think about other areas where you may save without sacrificing such a critical safeguard. Busy landlords often plan on a full complement of coverage as a cost of doing business. Insurance is important to protect all of the hard work you do all year long, so consider your options carefully and give your insurance coverage the thoughtful deliberation that it deserves.