Insuring your investment property is a critical component in keeping it protected. The right insurance will also protect your own financial interests. Investing in Champaign-Urbana rental real estate can be an excellent opportunity, but it also comes with a lot of risk and a lot of liability.
Both a landlord insurance policy and a renter insurance policy will be required to protect your investment. Don’t wait until a claim needs to be filed to find out you’re under-insured or uninsured. Make insurance check-ins a part of your annual Urbana-Champaign property management plan.
Switching from Homeowners to Landlord Insurance
If you’re a landlord who has been living in your home for several years and then recently decided to rent it out, you’ll have to change your insurance policy. You’re probably protected by a homeowner insurance policy right now, which protects you as the owner/occupant and all of the possessions inside the property. When you’re not living in your home, this type of policy ceases to provide the right coverage.
Elements of a Landlord Policy
A landlord policy is different. It offers you more liability protection, which is important when you have other people living in what was once your home. Talk to your insurance agent when you’re no longer the occupant of your home. You’ll want to make sure your property is covered, and it’s important to have enough coverage that will repair or replace the systems and functions that might become damaged during a tenancy. When you’re converting your property to a rental, it’s important to understand the difference in policies.
A good landlord policy will cover the repair or replacement of your entire house, including the systems within it. Make sure you have enough coverage to meet the demands of the current market. If you bought your landlord policy 10 years ago and it’s still the same one that you’ve just renewed year after year without studying it, you might be at a disadvantage. Repairing your home today may cost a lot more than it did a decade ago.
Loss of Rent Coverage
Your insurance agent should make the necessary changes to cover your physical structure and to protect you against liability. Make sure your landlord policy includes coverage for loss of rent as well. If something happens to your home and your tenants need to move out because it’s not habitable, you’re going to lose that rental income. A good insurance policy will protect you against that loss and ensure you still have the financial resources you need to fix your home and continue meeting your mortgage and other obligations.
Require Renters Insurance of your Tenants
Your landlord policy will not cover a tenant’s personal belongings in the event of a loss. This is something you need to be sure your tenants understand. Renter insurance is inexpensive and easy to obtain. With a good renter insurance policy, your tenants will have coverage for their electronics, furniture, and other personal possessions if there’s a catastrophe at the house. A renter insurance policy also provides liability protection for tenants. It’s a valuable financial resource that provides peace of mind for everyone. We highly recommend you require your tenants cover themselves. They’ll be pleased to know it doesn’t cost much per month.
These are just some of the insurance basics you need to consider when you’re preparing to rent out your property. If you have any additional questions, please feel free to reach out to us at Ramshaw Real Estate. We’re your Champaign-Urbana property management resource.