Making sure your rental properties are properly insured

Rental property insurance, or landlord insurance, is your key "risk management" tactic, but it is not foolproof. You cannot completely eliminate risk from this or any other investment strategy. Your single goal is to manage – and minimize – your exposure to risk and hence potential lawsuits.

And if you're looking for low cost landlord insurance, forget it! This is one area where you get what you pay for. Of course you can and should price shop, but your primary goal is to get the coverage you need to fully protect yourself, not to save pennies.

Things to watch out for...

Fire insurance or "HO-2". This covers exactly what you're seeing... FIRE. No wind, hail, vandalism, theft, destruction, etc. FIRE is ALL. So many people do not realize you can get a landlord policy that will cover all the "non-coverage" points I have mentioned above AND add loss of rent. So if a person skips out on rent, you will have coverage to keep your income rolling in until you find a new/better renter for your property.

I would also advise you require & build an adequate renters insurance (HO-4)plan into the property ( that way you will know coverage is in force).

While adequate rental property insurance is your first line of defense, it should represent only one pillar of your overarching risk management strategy. Other ways to manage your risk include:


Manage your income property activity as a real estate LLC.

Eliminate hazardous conditions on the property as soon as you become aware of them (loose steps, loose hand rails, perpetually icy walkways, etc.).
Hire out any repairs that could result in injury if not done properly (repairing steps on a fire escape, electrical work, structural repair, etc.).

Do not let tenants make any substantial repairs for you.

Make sure contractors are licensed, bonded and insured (liability & workman's comp.).

Carefully conduct rental credit checks on tenants to reduce the chance that you'll get stuck with a bad apple.

Do not give tenants your home address – get a P.O. box.

But again, your first line of defense is to have good landlord insurance protection to cover yourself against extensive property damage and lawsuits.

I have worked with hundreds of landlords and insured even more properties. Call me at 1-855-GET-SELECT (438-7353). Let me put my experience to work for you. I will make sure you are PROPERLY insured.