Investing in rental properties is a great way to generate some income. However, landlords have a lot on their plate. For example, they have to deal with tenant-related issues, purchase insurance, and maintain the property.
Furthermore, there are many landlord insurance myths floating around. Making these mistakes can lead to financial burdens and confusion. So, we will discuss a few of these myths so you can avoid making these common mistakes.
Many landlords believe that their personal homeowners’ insurance will provide coverage to their rental property. However, this isn’t the case since homeowners insurance only covers the home you reside in. This is because rental properties have their own unique risks.
Therefore, if you decide to put one of your properties up for rent, you’ll need to purchase landlord insurance. It will provide coverage for your rental property and protect your valuable asset.
Another common myth among landlords is that their property will have coverage even if their tenant takes a long vacation. This isn’t always the case because some insurance providers have a set time frame for how long a property can remain vacant for. This is because vacant properties are prone to burglary, vandalism, and other damage.
Therefore, you’re tenants need to notify you beforehand if they’re going out of town for a while. Talk with your insurance provider to see if they will cover the property for that particular period of time. If not, you may need to purchase additional coverage.
Many landlords assume that having landlord insurance provides coverage to their tenants belongings as well. However, this isn’t the case since landlord insurance only provides protection to the property and the owner’s belongings.
It won’t provide coverage if the tenant’s personal property is damaged or stolen. Therefore, you can add a clause in the rental agreement that states that your tenant must have renters insurance. It’s not mandatory by federal or state law, but it’s better to be protected in case an incident occurs.
Some landlords assume that their insurance coverage will compensate them if their tenant fails to pay their rent for whatever reason. Unfortunately, this isn’t how it works. Landlord insurance will only cover loss of income if the property becomes unsafe to reside in as a result of a covered peril.
While renting the property to a family member can put your mind more at ease, it’s still wise to get landlord insurance to protect your investment. Anything can happen, you don’t want to be stuck footing the bill if an incident occurs.
By purchasing landlord insurance, you can protect your investment the right way. Therefore, it’s imperative to clear out all the misconceptions regarding landlord insurance beforehand, so you don’t face any problems down the road.