If you’ve got the funds and you’re looking for a long-term passive income, investing in a rental property may sound appealing to you. This property appreciates over time and when you think it’s time to sell it or you want to simply keep it as a place to live in, it will give you the flexibility you need. But no matter what your reason is for investing in one, securing rental property insurance is critical.
In this article, we’re discussing why it’s a need and how you can choose the best coverage for your property.
Reasons to Buy Insurance for Your Rental Property
A smart investor is someone who secures a certain level of assurance to protect their investment. If you own a property that you’re renting out to others, having rental property insurance will give you the following benefits:
It keeps your property protected against damage. There are different reasons why your rental property can get damaged — from natural calamities like hurricanes and snowstorms to man-made ones such as vandalism or arson. The most basic of insurance policies can cover expenses for these damages.
It protects your liability as a landlord. It can be costly when a tenant gets involved in an accident or becomes ill because of your negligence as a landlord (e.g., failure to address hazardous things within your property). If your tenant asks for compensation, your insurance can help you shoulder that.
It’s a safety net for your rental income. While rental properties are a good source of income, unexpected economic crises can still emerge — rendering your tenant unable to pay rent. Should such an event arise, your insurance policy can offer the rental income protection you need. You’ll be able to receive funds that can cover the operating costs you’ll incur while the tenant can’t pay rent yet.
It boosts your rental property’s image. If you have insurance for your property, you can use it as a good selling point. If someone looking for a property to rent, they’d be more confident to choose an insured one. It also demonstrates your strong commitment to your business and your care for your tenants’ conditions.
Choosing the Right Coverage
To give maximum protection to your property, choosing the right rental property insurance is the key. Here’s how.
Know the most suitable type of insurance. Insurance policies for rental properties are typically categorized depending on how long you’re renting them out. There’s insurance for long-term rentals, infrequent short-term rentals, or frequent short-term rentals.
Select the right coverage. Each insurance policy also has different types of coverage. Do you want to protect your property from damage or do you also want to have a safety net for your rental income? You can also opt to add more specific features (e.g. Protection from a flood if the property is located in a flood-prone area). Just bear in mind that the more coverage you have, the higher the premium you’d need to pay.
Do a background check on your insurance provider. Your insurance provider should first and foremost be credible. Can they really provide the fund you need promptly? What do their clients say about them? Are they flexible and are their premium rates reasonable? Also, assess if they offer great customer service.
If you need an affordable rental property insurance that can give you a peace of mind as a property owner, we can help you at Insurance Brokers of Maryland. Visit our website to learn more.