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Asset Protection & Insurance: Is Your Leeds Rental Property Covered?

Filling Out Insurance Paperwork with a Model House in the ForefrontEverybody knows that Leeds rental property owners must have good quality insurance to protect their real estate investments. You just don’t know when tragedy will strike but you have to prepare for it. This is why it’s necessary to have insurance. But it’s not as straightforward as going to a provider and getting one. There are several different kinds of insurance, each respectively has its own coverages and limits. That fact can make identifying which insurance you need quite a challenge. Landlord or Investor insurance, landlord liability, umbrella, and flood insurance are just a few examples of what’s available. However, don’t let the complexity and number of choices overwhelm you. It really is important to be insured. In a way, it’s like owning a fire extinguisher. Sometimes you feel like it’s more trouble than it’s worth but when you do need to use it, you’ll be very glad you got it. Now, since different types of insurance are designed to protect different things, understanding well what purpose each can give can help you work out how to best protect your rental property assets with the correct type and amount of coverage.

Unlike homeowner’s insurance, Landlord or Investment Property Insurance is purposely drafted to protect investment property. This type of insurance covers the rental home and usually exterior features, such as sheds or fences. Landlord insurance does not cover your tenant or your tenant’s personal property. This means that if your tenant brought some expensive appliances, furniture, or jewelry into the house, and these things were damaged, the insurance wouldn’t cover them. This is why most landlords require that their tenants purchase their own renter’s insurance policy and sometimes tenant liability insurance on top of everything else.

Landlord Liability insurance is different from Investment Property Insurance but is often included. The reason for this is that this type of insurance covers losses related to damage, theft, or vandalism caused by tenants or their guests, it also covers liability in the event of an injury. This type of insurance is intended not only to protect your rental home but also the financial aspects of your investment as well.

An umbrella policy is simply what it seems to be: broad coverage for a rental property that adds an extra layer of protection for individuals who own property or have an occupation that is prone to lawsuits. Because being landlord suits both of these categories, it is worth checking an umbrella policy to protect your assets if you are sued for damages in excess of your other insurance policies. These policies also typically protect the insured against loss of rent or damages to other people’s property or injury caused by others, such as a tenant. It also protects you against vandalism, libel, slander, and invasion of privacy.

To better understand what umbrella insurance is, consider this situation. Let’s say your tenant is walking around the house and slips and hits their leg on a step, breaking their bone. Then they decide to sue you, and for some reason, they are awarded $300,000. What’s going to happen? Your regular insurance will cover the cost up to its maximum. Let’s say, for the purpose of this illustration, it covers up to $100,000. Great! But there is still the remaining $200,000 you need to pay. Enter the umbrella insurance policy. It comes in and covers you for the amount on top the maximum limit of your other insurance. It pays the $200,000.

Keep in mind, however, that even an umbrella policy usually does not cover losses to your rental property due to a flood. In many ways, flood insurance is usually offered as a separate policy that must be purchased through the National Flood Insurance Program (NFIP). This type of insurance typically covers the actual cash value (not the replacement cost) of the physical structure of the home and a detached garage, if any. Although multiple Leeds property owners believe that they don’t need flood insurance because their property is not located in a “high-risk” area, the truth is that floods can and do happen anywhere, and usually strike without warning. At any rate, whether from a burst pipe or an unusual amount of rain floods damage and destroy homes on a regular basis.

With a considerable number of different types of insurance out there, it’s vital to examine your coverage amounts closely and make certain that you are not paying for insurance you don’t need, but, furthermore, that the insurance you do have provides the right amount of coverage. Nonetheless, being aware, at any rate, if you have the right insurance coverage can be trouble until you have reliable industry experts on your team. At Real Property Management Victory, we can help you determine how to best protect your valuable properties and your financial well-being with the right insurance coverage. To learn more, contact us or call us at 205-793-0700 for more information.

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