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Insurance policies are essential for protecting your possessions and financial interests, and the same purpose applies to your rental properties. Landlord insurance protects property owners from several risky circumstances, and there are a plethora of reasons why this can benefit your business.
What Does Landlord Insurance Cover?
Property Damage
Whether it's tenant-caused like vandalism damage or natural disasters from hail and wind, landlord insurance covers the costs you need for repairs. Given that San Jose, California is prone to natural disasters, landlord insurance is a great investment for covered loss. Just be sure to review your insurance policy to get the right coverage.
Some damages are not included in the coverage such as intentional damages, which can lead to insurance fraud. Normal wear and tear and damage caused by neglect are excluded as well, along with certain natural disasters without purchasing additional coverage. Knowing the limits of your landlord insurance will keep you from incurring additional costs.
Liability Protection
Most landlord insurance policies also include liability protection which protects you from financial losses due to legal issues. Should a tenant, guest, or other individuals sustain injuries within the premises of the rental property and press charges, liabilities like legal fees and medical costs may be covered by the landlord's policy.
Keep in mind that this only applies to accidents that occur outside of your tenants' apartment units. If a visitor is injured within their units, only renters insurance can cover costs as they are held liable. However, landlord insurance coverage may apply if the incident was caused by landlord neglect, such as failing to repair structural damage within the unit.
Loss of Rental Income
A landlord insurance policy can help you recover lost rental income when the house or rental unit becomes inhabitable due to covered perils such as water damage from appliance leaks and burst pipes, or fire damage from faulty wirings. Depending on your landlord's insurance premium, additional construction expenses may be covered as well.
Note that landlord insurance-covered losses don't include loss of rental income due to late payments. You may avoid this by requiring a security deposit from your tenants. Rent guarantee insurance premiums can also be covered by tenants by stating it in the lease agreement.
Homeowners Insurance vs. Landlord Insurance
Homeowners insurance is a form of property insurance, which means that it focuses more on your property and its furnishings. It's the better option if you live within the premises of your rental property as well. While different in many ways, it does carry similar coverage in some aspects such as covering property damage costs.
Landlord insurance is designed for non-owner occupied properties, but a homeowners policy will help with personal property coverage, especially if you have your own furnishings outside dwelling units that carry the risk of being damaged or stolen. Of course, it's still advisable to acquire landlord insurance on top of property insurance for a more comprehensive covered loss.
How Much Does Landlord Insurance Cost?
Insurance costs can depend on the landlord's insurance provider, but it can typically cost up to $1,700 per year, which is generally higher than homeowners insurance. The price will ultimately depend on several factors based on the rental property you have. The factors include:
Property Type: Single-family homes, multi-family properties, and condos all have different risks, with multi-unit properties carrying more.
Condition: Older rental properties will have higher premiums due to wear and tear, leaving the building prone to more risks and damage caused by tenants or natural disasters.
Location: Places like San Jose, California are prone to natural disasters, which means that the insurance costs can be higher. This also applies to neighborhoods that have higher crime rates.
Coverage: You can opt for additional coverage for your landlord policy to better protect your property, but many landlords choose to leave these out due to the added expenses.
Insurance Provider: It's important to research insurers you can purchase from to get the best price in San Jose, California, especially since the location does call for a more expensive insurance cost.
Some companies offer bundles that include property insurance with landlord insurance. Having a larger landlord policy coverage for your business can help you save money in the long run, especially in the event of injured tenants or property damage due to uncontrollable circumstances like hail or hurricanes.
Are California Landlords Legally Required to Get Insurance?
No, they are not. While landlord insurance or other forms of property insurance are not required for legal compliance, you are still recommended to purchase one since it covers liability and protects your assets.
You will be eligible to purchase the insurance coverage as long as you are renting out a property. You can control the coverage of the insurance such as building damage from certain natural disasters or house fires that leave a dwelling unit inhabitable.
How to Find the Best Landlord Insurance Quotes?
You can find insurance providers in California and compare insurance quotes, as well as the extent of the coverage, policy limits, and exclusions. Most landlord policies typically include damages caused by vandalism, fires, hails, and other common disasters.
Look for policies that have wider coverage for liabilities like injury and legal trouble, as well as coverage for particular natural calamities. You would fare better by hiring professional services from a broker or an insurance agent to find the best deal for your assets.
With the Help of Property Managers
Hiring a property management company can be beneficial to your business in many aspects. A professional property manager can help you find the best deal with wide coverage for your rental properties, and even recommend which ones you should get based on the property type you have.
Insurance is typically used for emergencies and unwanted circumstances, and property management services can help you avoid that process by ensuring seamless operations and regular maintenance and repairs when needed.
Want to learn more? You are just a few clicks away from a free consultation. Feel free to contact us for your rental property management needs!
