A wise property investor will always be looking at ways to reduce risk. It is therefore imperative that you correctly insure all your investment properties. You never know what the future might bring, and as hard as you might try tofind the perfect tenants, there are noguarantees.
Insuring an investment property is different to insuring the property you live in but it need not be complicated. Here is a rundown of the different types of insurance you may need and what each covers.
Many investors have found to their cost that they have been left with damage or loss of income due to the actions of tenants, which the bond did not cover.This can be catastrophic financially ifthere is no redress available.
Landlord’s Insurance will protect you against tenant related losses ensuring you are covered if your tenants cause any damage or default on the rent.
i.Damage by tenants
Most policies will cover malicious damage caused by tenants but will not automatically cover accidental damage. Some policies will cover accidental
damage or deliberate damage caused by visitors, so shop around.
ii.Loss of rent
Landlord’s Insurance will cover rent default but other instances may be covered as well such as; loss where a tenant has been evicted due to a court order, tenants obtaining a hardship order, and even unexpected death of a tenant.
Your rental income can even be protected in an instance where your property is uninhabitable due to malicious damage caused by the tenant.
Just like insuring your the property you live in, you should have an extensive building insurance policy. Building insurance covers the structure of your property, so you will be covered if there is damage to the property including partial or complete destruction.
Check the policy carefully to make sure you are well protected. It is still a terrible memory for those who owned propertiesdestroyed during a flood, who discovered they didn’t have flood coverage. So makesure you know exactly what you are covered for.
Don’t forget contents
Even where you don’t offer a furnished property, contents insurance will still be necessary. Contents include items that are not part of the structure of the property but you may own more of these that you think. Carpets andfloor coverings, curtains and domesticappliances are all considered contents.
Contents cover can be covered in your landlord’s Insurance policy so make sure to check this and chose the correct level of cover.
Liability cover is essential to protect you if you are sued due to any accidents occurring on your property.
Having the correct insurance coverage for your investment propertiesis essential for your financial stability andpeace of mind.
Whatever polices you take out, ensure you know exactly what you are covered for as not every policy is the same and claim limits often vary. Shoparound for the best deal to find thepolicies that are right for you but don’t necessarily take the cheapest option as it may not offer the best coverage.