Right off the bat, ignore everything I say and do more research. Only opinions here.
I’ve always been anti-insurance because I think it’s a bit of a scam with how things get upcharged so incredibly high (mostly health related). Health insurance, car insurance, home owners insurance.. I hate them all. I think if you live a healthy lifestyle, you drive safely, and you fix things in your house yourself, insurance really shouldn’t be important OR EXPENSIVE as it is today and it’s because we’re frightened of being that one person who actually needs to use insurance.
Your savings account should be your insurance! Insurance should be bought to cover catastrophes, serious accidents or ailments that your emergency savings can’t cover. But in reality, we know the idea of insurance is necessary today because most people don’t have a savings anymore. Most people can’t pay for their routine dentist appointment out of pocket..
That rant out of the way, Florida has seen around 13 property insurance companies go bankrupt and 9 leave the state in the last ~18 months. Insurance is getting out of hand. Landlord insurance is likely going to be required of you by your lender and you won’t have many options to shop out.
What is landlord insurance?
It covers property damage, liability in case someone is injured on the property, and loss of rental income if the property becomes uninhabitable. If you buy a rental as an investment property, you may be required to get this type of coverage immediately.
If you are turning your primary into a rental, you may have the option to retain existing coverage at a cheaper price or at least not be forced to upgrade to landlord insurance immediately.
Renters insurance is NOT what this is. Renters insurance covers the belongings and possessions of the renter and is a policy between them and an insurance company. Your policy is NOT intended or necessary to cover their belongings so don’t get tricked into that. Most property managers and apartment communities require a certain level of renters insurance for all their tenants.
Types of Rental Property Insurance
-
Landlord Insurance: This is a must-have for rental property owners. It covers property damage, liability in case someone is injured on the property, and loss of rental income if the property becomes uninhabitable.
-
Liability Coverage: Essential for protecting against claims of property damage or injury claims made by tenants or visitors.
-
Loss of Rental Income Insurance: Provides coverage if your property becomes unlivable due to covered perils, ensuring you don’t lose rental income during repairs.
Insurance premiums for rental properties can vary based on several factors
-
Property Location: Properties in areas prone to natural disasters, like hurricanes, may have higher premiums (Fort Myers, Naples, Miami, etc).
-
Age and Condition of Property: Older properties or those in poor condition often carry higher insurance costs due to increased risk.
-
Tenant Occupancy: The type of tenants and the length of their leases can affect insurance rates.
When shopping for rental property insurance
-
Compare quotes from different insurance providers.
-
Understand the specifics of what each policy covers.
-
Consider bundling multiple properties under one policy for potential discounts.