Being a landlord comes with a great deal of responsibility. Not the least of which is to make sure that the property or properties that are owned are insured with the proper insurance policies. There is a multitude of policies available to landlords to protect themselves and their investments. The available insurance policies can be classified in three distinctive categories. There are policies that are essential, meaning they cannot be done without. The second category would be elective, meaning that under certain circumstances these policies would be needed. The third category is expendable, meaning that these policies would be completely up to the discretion of the landlord to take these policies out.
Essential landlord insurance policy are those policies that the landlord should always have on his or her properties or investments. Always remember the goal of insurance is to prevent large financial loss in the event of disaster or peril. These essential coverages and policies are the minimum required to ensure that the landlord is properly addressing their risk management.
The first essential landlord insurance policy is the Hazard and Fire policy.
- This covers damage to the physical property the landlord owns and is always needed. The types of things covered by the Hazard policy include theft, vandalism, hail, heavy wind, lightning, falling trees, snow, sleet, ice, frozen and burst pipes, explosion, smoke damage, damage caused by vehicles, and electrical problems. Another of the essential policies for landlords is liability insurance. This insurance policy protects the landlord from injuries, accidents, or damages that have occurred on the landlords property. The third essential policy for landlords is the Sewage backup policy. This policy covers the damages or loss of property due to a back up of the sewage system. Much water damage can be caused by this occurrence which makes this essential coverage.
The next category of landlord insurance policy are elective policies.
- The policies are recommended in certain circumstances but by no means essential. The first of these is flood insurance. The reason flood insurance is elective is that every landlord does not own property on or in a designated flood zone. Hence there is no need and in many cases no availability of flood insurance. However, if a landlord has property in a flood zone this insurance becomes essential. Another type of elective policy is terrorism insurance. It is only needed in cases where there is a fear that property could be damaged or loss incurred as a result of terrorism. The third elective policy is the builder’s risk insurance. This insurance is only needed in the event that a landlord is having a home renovated for rental and because the home is vacant there is an increased risk of vandalism, theft and contractor injuries. These policies are up to the landlord to elect to purchase them or not based on the circumstances surrounding the property.
The third category of landlord insurance policy are expendable policies.
- This is a policy that is completely nonessential and should only be purchased at the landlord’s convenience or personal desire. The primary policy of this nature is an Umbrella insurance policy. This policy gives an extra layer of protection to the landlord, however, it is not needed and should be purchased only if the landlord enjoys a heightened level of security.
The landlord has many policies available. Some are essential and cannot be left out of an insurance portfolio. The elective policies are needed based on the circumstances with the property concerned. The expendable policies can be done without but do provide an additional layer of protection. The landlord must answer the question of how much risk they are comfortable with and choose their policies accordingly.