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What
Does Landlord Insurance Cover?
Rental Property Insurance Covers PART 1
Knowing what does landlord insurance cover is critical
because a landlord is exposed to a more risk than the average
home
owner. Find out all about rental property insurance cover and which
ones should you be buying.
Together
with your mortgage payments and rental property tax, your
insurance costs will be one of your major rental
expenses. We will list all the
common
types of rental property insurance cover and
explain what does landlord insurance cover below:
Let's begin with the two types of landlord insurance covers that are
essential for almost every landlord - Rental
Property Fire Insurance and Landlord
Liability Insurance
Rental Property Fire
Insurance
Just as the
name suggests, fire insurance will cover your losses if
your rental property is damaged in a fire. It usually includes all
types of fire damages ranging from a small kitchen fire to a complete
blaze that burns down your entire property.
The amount for your rental property fire insurance cover should be
equal to the cost
of rebuilding your entire rental property. This amount will be lower
than the total value of your rental property because it does not
include the value of land.
It's important to give more accurate estimate when it comes to your
rebuilding costs. If the value that you quote is too high, you end up
overpaying for your insurance premiums. On the other hand, your
insurance payout will not be able to cover your losses if you under
estimate your rebuilding costs.
When it comes to landlord insurance covers, both landlord liability and
rental property fire insurance are must-haves
for most landlords. In fact a lot of mortgage lenders will
require you to have these two basic types of rental property
insurance cover before they will grant you loans for rental
property.
Landlord Liability
Insurance
Managing a
rental property is similar to running a business in many
ways. Just like most businesses, you are vulnerable to possible legal
lawsuits by your tenants or other people who come in touch with your
rental property.
For example
if the stairs has a gaping crack
that causes injury to your tenant, you may find yourself slapped with a
nasty lawsuit especially if you were informed of the damaged stair
beforehand.
Landlord
liability insurance (also known
as 3rd party liability insurance) protects
you by covering your costly legal
expenses and any claims that are awarded by the court to your tenants.
Because of the sky high legal costs and payouts, landlord liability
insurance is highly recommended for
most rental property owners.
To learn more about what does landlord insurance cover for lawsuits, Click here for our
complete landlord liability insurance guide.
A general
rule
of thumb is to be insured for a sum that is equal to your entire net
worth. For example if your entire wealth is worth $1.5 million,
your insurance should cover up to that amount.
Now
that you know what does landlord insurance cover for fire damage and
legal lawsuits, learn what are the other important rental property
insurance covers:
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