1. Replace your homeowner policy with a rental property insurance policy.
Chances are your existing homeowner’s policy no longer provides the needed coverage for your rental property. If your insurance company is not aware the property is a rental, it may deny coverage if a loss occurs.
Rental property insurance policies provide liability and structural coverage for the home and its occupants. However, it does not cover tenants’ personal property in the event damage occurs via fire, water, etc. So, the tenants should purchase renters’ insurance to cover personal belongings.
2. Ensure you insure your vacant property.
During the big freeze of 2014, a Garner landlord had a property that had recently become vacant. He discovered the pipes had frozen and burst, causing significant damage. When the insurance adju
ster inspected the property and discovered no one was living there, he denied coverage for the claim due to a clause in the policy that required the home to be occupied to qualify for coverage.
Broader, more landlord-friendly coverage that protects vacant properties are generally available for no additional cost. As an owner, you simply need to find an insurance company that provides the coverage which best meets your needs.
Click here to learn more about our services to help Garner Landlords protect the value of their assets.
3. Choose replacement cost vs. actual cash value.
The clients who experienced significant loss due to frozen pipes had a policy that dictated the damage would only be repaired based on the “actual cash value.” This meant the insurance company could depreciate the value of the damaged items; for example, the seven-year-old carpet had a zero dollar value.
The insurance company ultimately paid only half of the loss, leaving the owner responsible for the difference–all because they had chosen to “save” a few dollars by choosing a policy that paid out on actual cash value vs. replacement cost.
When reviewing insurance costs, Garner landlords should consider replacement cost coverage—Actual cash value may have saved you a few bucks up front, but is it worth it?
While these homeowners learned the hard way, now is the time to review your policy and learn from their experiences.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.
