Trick or Treat

Read a limerick followed by insurance tips for landlord/investment property owners.

Trick or Treat - Kitchen stove fire

Learn the importance of insurance in protecting investment property owners’ interests.

There once was a landlord aplenty
Revered to be prudent and tenty
His tenants were a treat
Rents never missed a beat
‘Til one caught fire and burned up twenty.

Scary surprises happen, and they may happen at any time to anyone. The following insurance tips for landlords/investment property owners may help prevent your investment from going up in smoke:

  • Purchase and maintain adequate property and liability insurance to cover your investment property and your liability risk. With respect to property insurance, insure according to replacement cost value of your investment property(ies). Some investment property owners have tricked themselves into saving money by insuring to market value or actual cash value, only to be treated to an inadequate loss payment when a property loss occurs.
  • Maintain a current schedule of all properties owned and advise your independent insurance agent of changes in a timely manner.
  • Pay attention to the loss of business income clause in your insurance policy(ies). This clause is not open-ended under any policy form. However, some options to customize loss of business income are available, subject to additional premium. Any changes would have to be made BEFORE a business income loss occurs.
  • Require tenants to purchase their own property and liability insurance. Many tenants have learned the hard way that they need renter’s insurance to protect their own property, as well as potential liability that may attach to them arising out of their use of the rental property.
    • The landlord’s/investment property owner’s insurance policy does not cover property owned by tenants. Not only do tenants need renter’s insurance to cover loss to their own property, they also benefit from the loss of use clause incorporated in standard renter’s insurance coverage, if the unit becomes unusable by the tenant from a covered peril.
    • With respect to liability, it is in the landlord’s/investment property owner’s interest to transfer risk to the tenants, where possible. For example, there is the potential that an accidental fire loss may be transferred to the liability policy of the tenant in whose unit the fire originated. This would benefit the landlord/investment property owner, because his/her policy loss history would be lessened by the amount paid by the tenant’s liability insurance policy, which in turn, would likely reduce premium surcharges due to loss history at renewal.

Richey-Barrett Insurance is your Trusted Choice Independent Insurance Agent for investment property insurance. Call us today to discuss your account.

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