When picking out a landlord insurance policy, there is often a tricky balance to find the right amount of coverage. Obviously, the more coverage, the more expensive the policy, and it is often difficult to determine which coverage and how much coverage you actually need for your rental properties. We always recommend a DP-3 Policy for optimal assurance. However, selecting supplemental insurance is where it gets tedious. In order to help you make an educated decision about supplemental insurance, we are highlighting three of the most common landlord insurance pitfalls:
Water damage often has the most exclusions.Water damage such as flooding, standing water, drain and sewage back up, and the source of the water damage (such as a roof leak) are often excluded from a Water Damage Policy. It is important to read the fine print on all the policies and work with professionals to avoid lack of coverage disasters. Water damage can cost upwards of $30,000, which would best be covered by insurance.
Vacant properties are usually not covered.Watch out for this one! Even if you have the most optimal, highest amount of coverage, it might not be applicable if your property is vacant. Talk to an insurance professional about vacancy insurance if you have a vacant property.
If you act as your own contractor for the property, your liability coverage will not apply.For those contractors who run rental properties, pay attention. A separate insurance policy is crucial when acting as a contractor. If there is a construction-related injury on the property and the landlord is the contractor, landlord liability insurance will NOT kick in.
We strongly suggest careful research and consultation when selecting your insurance policies. Find more information on Landlording, Landlord Insurance and more by checking out our most recent Investor Resources.