Avoid Rental Property Insurance mistakes!
Hey landlords! Do your tenants a favour. Make sure they have adequate coverage for their possessions and belongings and all important liability insurance coverage, especially in such a litigious society as we have in Canada.
We all know that should some damage happen to your property, especially if you are not the one who caused the damage, you’re going to expect the person who instigated the damage to make good or pay for the damage caused. This is what the insurance company will do to the tenant living in your basement or in your rental property. They will want to collect the funds from the person who caused the damage.
Most tenants have furniture, clothes, TVs, computers and other belongings that could be ruined by water or fire. The landlord policy does not cover those items. So it's just the right thing to do to make sure that your tenant has adequate contents and liability insurance.
You got to protect your rental property with the right coverage. Make sure you properly cover that prized investment property that you own before you hand over the keys.
But what about the monthly income you receive from your tenants? Is it properly covered in the event that the property cannot be rented for several months due to a fire or some other peril? What if your tenant hurts themselves in the property, suffers a serious injury, and now wants to put the blame on you? You need to have adequate liability even for frivolous lawsuits.
Some of these points will explain why it's important to have a landlord or rental property insurance.
What else will landlord insurance cover?
It will cover the structure up to the policy limits. Here’s where it's very important to make sure that the property is covered for the actual replacement value of the structure. The main reason why this is so important is that there is a clause that most insurance companies have that will not give the guaranteed replacement cost coverage on a rental property, so you must make sure that the property is not under-insured.
There are also times when a client may forget to cover their personal belongings that they own for the rental property such as the fridges, stoves, microwaves and other appliances as well as lawn mowers and other landscaping equipment.
I own a rented condo. Why do I need landlord insurance?
Interesting question, but it has come up many times. Do you know if the building is already insured with the condominium corporation? Some condo corporations don't have insurance or adequate coverage. If you are a wise landlord, you have to insist on your tenant to ensure that they have adequate renters insurance and liability while they are on your property.
As an owner of the condo, you should be aware that there could be incidents that happened in the common areas, such as the parking lot or hallway. These incidents may affect the owners of the condominium units, and they could be found liable and be subject to pay the portion that they would have to pay for the condominium corporation deductible. This will help to cover the gaps that the condo corporation policy leaves behind.
Tenants have also sued the owner out of the condo unit due to personal injury to themselves or their family. The condominium unit owner could be found liable for not fixing many basic things in the condominium unit such as broken tiles or faulty wiring, and a tenant becomes injured because of that negligence.
Speaking to a professional broker who has access to numerous markets to be able to deal with complex personal property insurance would be very wise for the average real estate investor.
Many companies will insure your home but won’t touch your rental property, especially if it has roomers or boarders. But what if you only rent to students? What if you have several rental properties and the insurance companies now say, ‘no more’?