What is Homeowners Insurance
Helpful Hints for Landlords
Some of the property insurance covers can be described as falling under three levels which are made available in primary policies, all of which included liability coverage. Many insurance companies’ offers competitive insurance packages specially tailored to meet the needs of rental property landlords, so it is always suggested to shop around of rates. Ask one of our friendly Starco Insurance agents to assist you assuring your rental property is a secured investment.
Basic Coverage
Basic Coverage: Most companies offer a basic coverage package that insures your investment rental property against loss from fire, hail, explosions , damaged caused by smoke, riots, vandalism, water leaks and I am sure there are more potential threats that you can added here.
This type of coverage often doesn't include certain contents, such as boilers, equipment, and machinery unless stated in specifics as an endorsement. For assured protection and peace of mind it is always best to consult with your insurance agent about additional coverage that may be beneficial.
Insurance companies can pay owners for losses in two ways:
One method is by actual cash value, this coverage pays cost of replacing property minus its physical deprecation. The standard policies most insurance companies offer provide for actual cash value coverage only.
The second method of coverage pays for the cost of replacing the property without subtracting for physical depreciation. You must specifically have and endorsement disclosure in your policy and pay extra for replacement coverage cost.
Renters insurance like homeowners insurance policies, the location, age, type and quality of construction of your property are significant factors in determining your insurance premium monthly cost. It is advisable for you to get an insurance estimate before you purchase property to avoid unpleasant surprises. There are some property construction factors that could cause an insurance company not to insure you. For example having wood shingles located away from fire protection may not be insurable at all.
Some insurance corporations have a coinsurance clause that requires rental property owners to carry a minimum amount of coverage. If you carry less that the minimum amount agreed upon of coverage the insurance company imposes a coinsurance penalty that reduces the payment on the loss by the same percentage of the insurance shortfall. As an example you were only to carry $1 million in coverage when you should have $2 million, you're only carrying 50 percent of the minimum required insured value. If for some reason the building or property suffers a loss, the insurance company pays only 50 percent of the loss.
Many rental property owners first become investors by renting out their former personal residence when they buy new property. The may not realize they should immediately contact their insurance agent and have their homeowners converted over to a landlords policy, which contains special cover – age riders that aren't in the typical homeowner's policy. Due to the increase in liability risk for rental properties, some insurance companies may not even offer this coverage, where others specialize in these types of business.
Excess Liability also known as Umbrella Coverage
Excess liability or umbrella coverage can be a more affordable approach at substantially increasing your liability protection and is designed to supplement your main or basic policies. An umbrella insurance policy provides both additional and broader coverage beyond the limits of the basic commercial general liability insurance and other liability coverage this coverage is only applicable after the primary policy limits have been exhausted.
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