Cover your Assets

By: Michael Peterson

If you own a rental property, make sure your insurance coverage is protecting your investment. Most insurance companies offer specialized insurance packages for landlords and property owners that help cover any loss incurred by tenants, lawsuits, loss of rent and even terrorism. Though in many cases, regular household insurance will cover claims on rental properties, most household insurance policies aren't tailored to the needs of landlords and therefore don't address them. Sometimes simply having a tenant can make your home insurance policy null and void - so check the fine print!

LOSS OF PROPERTY

The most basic coverage will protect you against major losses in case of fire, high wind or other damages that make your property unrentable. All policies are different however, and no one policy will suit all landowners in all areas of the country. there are however, two basic types of policies to choose from:

1. NAMED PERIL policies require the policy holder to choose specific types of losses that will be insured against

2.COMPREHENSIVE policies provide much broader coverage and includes a wide variety of accidental losses. Despite the name however, most polices are not truly 'comprehensive.' Make sure to check the list of exclusions before you make your choice.

INSURANCE AGAINST TERRORISM?

Aside from flood damage, one of the most widespread exclusions right now are terrorist events. If you own a rental property in a major urban center, you might want to look into coverage that protects you against this as well. After 9/11, many agencies adjusted their policies to exclude "terrorist events" from basic coverage. The attacks, which cost the industry in excess of $40 billion, caused a backlash that saw most companies raise prices, raise deductibles, and alter polices to require policy holders to purchase terrorism insurance separately (if available).

Increasingly however, specialized landlord policies address this issue and provide some sort coverage for those who own rental property. Though burned by the attacks on the world trade center, support from the federal government has allowed insurers to get their courage back up and give landlords the kind of protection they've been asking for since 2001.

LOSS OF RENT

As part of their coverage for property owners, many companies offer additional insurance against loss of rent. In most cases this applies to situations in which the property becomes unrentable due to damage. When this happens, the insurance company will cover the rent on the property for a certain number of months. Other types of rent loss protection cover long periods of time when a property goes unrented that isn't due to damage or protect landlords against tenants who default on the rent.

Landlords with multiple rental properties or buildings will probably also want to consider insurance against lawsuits or policies that will cover legal fees in the case of a lawsuit. Keep in mind that because policies at different insurance agencies differ, you should shop around to find the coverage that best suits your needs.

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