What Insurance Do You Need as a Landlord?

Posted on Oct 25, 2016


Most people who make the decision to invest in rental properties and become landlords do so as part of a long-term plan for investing in their future. You probably saved for quite a while to purchase that investment property. Now it’s time to protect it and your other financial interests with insurance. The question is, what kind of insurance protection will best serve your needs as a landlord?

Types of Landlord Insurance Coverage

There are several things you should expect from your landlord insurance coverage. These are all designed to protect your interest in the property your financial security if accidents occur on your property or if a covered event results in damage to the property and even the loss of rental income for the property.

Property Insurance

This type of coverage for landlords helps to repair or replace property that is damaged or destroyed by a covered event, such as a fire, lightning, or wind. Not only will it help repair and replace the structure of the buildings on your property, but also your personal property, such as appliances or furniture – if you provide them. It also extends to tools and such, i.e. lawn mowers, which are stored on the property too.

Rental Income Protection

When covered events occur and render the property uninhabitable for an extended period of time, this could result in a substantial loss of income for you – income you need to help maintain the monthly payments on the property while repairs are underway. This coverage helps to soften the blow by providing some income during this difficult time.

Liability Insurance

You can’t do much in the world today without an abundant supply of liability insurance. It’s really not an option and something you need to have. Often, New Jersey landlords feel comfortable seeking additional liability protection beyond the standard amount that’s included in most landlord insurance packages. Consult with your insurance agent to determine an amount that makes you feel confident of your protection.

Flood Insurance

All property in a flood zone should carry flood insurance which will pay for damage to the structure from flood, which is defined as a general and temporary condition where 2 or more acres of normally dry land or two or more properties inundated by water or mudflow. The payment is the Actual Cash Value (ACV) (replacement cost minus depreciation) of the damage.   Flood insurance doesn’t pay for loss of rental income, however.

Do You Need Landlord Insurance?

If you have a mortgage on the property you will be required to have landlord insurance. Whether you’re required to have it or not, landlord insurance is a worthwhile investment because of the protection it provides for you and your family. Insurance is always the one investment you make in hopes that you never need to take advantage of it. It’s also one that you’re incredibly glad to have made when the time comes that you need to take advantage of it.

How Can You Save Money on Landlord Insurance?

Saving money is important. It’s how you were able to save the funds to purchase your rental property. It is equally important to save money without sacrificing coverage. These are a few things you can do that will help you save money when you purchase landlord insurance.

  • Update the property’s wiring.
  • Install a fire suppression system.
  • Update the HVAC system.
  • Bundle policies – purchase multiple policies from the same provider. These policies can be for other rental properties, your personal home, or your automobiles and recreational vehicles. The more policies you purchase from the same company, the bigger your discount is likely to be.
  • Update the roof.
  • Install deadbolts, shatterproof windows, and other security measures.

Little changes can make a huge difference in insurance costs without sacrificing the coverage you receive. Also consider raising the deductible if it’s important to lower rates but you do have some cash reserves available for disaster planning. Just remember that when you raise the deductible you’re carrying a larger portion of the risk if something goes wrong.

Finally, let Otterstedt Insurance Agency work on your behalf to compare the costs between several different insurers to find the right combination of coverage and costs to make landlord insurance more palatable for you. Contact Otterstedt Insurance Agency today to learn more about your needs for landlord insurance and to find the policy that meets those needs best.


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