There are many different factors to consider when becoming a landlord. Justin shares what coverages you shouldn’t be without.
When becoming a landlord there are many different factors to consider. The most important, other than choosing a good tenant, would be making sure that you have the correct insurance coverage in place. Most tenant or landlord policies come with a higher rate since the home is not owner-occupied. The chances of having a claim at a non-owner occupied home rise by about 40%.
You will want to make sure the home is insured to value, otherwise you could have a large coinsurance penalty. Another important factor is that you have enough loss of rents coverage and that it matches your rent roll for the year. This is a valuable coverage. If your tenant is displaced because of a covered loss, you will still need to pay your bills.
Another important coverage is liability. It is important to have a minimum of $500k worth of coverage. This will protect you if you are sued or brought into a lawsuit by your tenant or a visitor. Hiring a property management firm is a great idea for tenant occupied homes, and many insurance companies will also provide you with a discount for doing so.
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