Do I need special insurance for my rental property?
The famous steel tycoon and industrialist Andrew Carnegie once said, “Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.” If that’s you, congratulations! You’re on your way to building generational wealth and a bright financial future. So how do you protect it?
If you own a rental property, you already know that you need to have a homeowners insurance policy. In addition, there are other types of insurance that you may need to protect your rental property, your personal assets, and your financial security.
Landlord insurance, also known as rental property insurance, is a special type of homeowners insurance policy that covers the potential risks that come along with renting your property out to tenants and third parties. A landlord insurance policy covers things that are not covered by your general homeowners insurance on the property.
Why you need landlord insurance
Homeowners insurance will cover certain aspects of your rental property, but it will not cover you from damages to your personal property inside the unit (such as appliances or furniture in a furnished apartment), damage to the home caused by tenants, and lawsuits by your tenants and their guests if they are injured or killed on your property.
Landlord insurance covers lost rental income
You depend on your rental income to pay the mortgage and taxes on your rental property or as part of your income and retirement savings. So if something happens that prevents you from collecting rent, what do you do?
A landlord insurance policy will cover the missing rent if a qualifying event, such as a fire or storm damage, prevents you from renting your property and collecting rent from your tenants. Landlord insurance does not provide coverage if your tenant simply fails to pay rent, loses their job or gets sick and can’t pay.
If a tenant damages your property, you’re covered
Sometimes, even a security deposit isn’t enough to cover the cost of tenant damage to a rental property. Especially during an eviction, a tenant can do enormous damage to a property out of revenge. If you’d rather stay out of court chasing funds you’re not likely to ever see, invest in landlord insurance. Landlord insurance can help you put your rental property back to normal with less stress and less out of pocket while keeping you out of court.
Eviction insurance can cover the cost to evict bad tenants
Landlord insurance does not typically cover the cost of evicting a tenant, but you can purchase an eviction insurance policy. The cost to file paperwork to evict a tenant in South Carolina is only around $40-$74, but the actual cost of evicting a tenant is much more. Moving items out of the rental property, disposing of the past tenants’ belongings, cleaning and repairing the property, and of course, the lost rent while all this is happening can cost you thousands of dollars. Eviction insurance can help you cover these costs so you don’t have to pay out of pocket, protecting your profit margin.
Need to purchase landlord insurance for your rental property?
Give Edwards Insurance Agency in Taylors, SC a call. We’ll help you make sure your rental property is covered so you can build wealth without worry.