7 reasons why one needs a landlord insurance

7 reasons why one needs a landlord insurance

Are you a landlord? Do you rent your properties to tenants? Well, that’s a pretty good source of income but have you ever thought of the financial and legal risks over letting your properties on rent could bring you? The perfect answer for that is a specialized form of insurance formally known as landlord insurance.

Having a healthy understanding of the real-world things that can go wrong with rental real estate, and how the legal system often assigns liability. Carefree attitude of landlords, can frequently torn apart limb from limb in bankruptcy courts to extract damages that would instead be borne by the landlord insurance.

Your standard homeowners insurance won’t solve the purpose. If that’s all you have, and your tenant can sue you, your world can still fall apart.

Here are seven reasons why you should change your mind & opt the Landlord insurance.

1.Homeowners Insurance Claims are not valid If the Property Is Rented

 If you have purchased a property for the sole purpose of renting it, and you no longer a resident in it, then you are endangering yourself and you are vulnerable to a huge financial loss and thus the need for a proper landlord insurance comes in to place.

Check with your insurance provider for specific exclusions. Some are more tolerant of short-term/vacation/occasional rentals than others. Be aware that renting your property over a month per year will likely prevent your homeowners insurance policy from giving you the protection you need.

2.You Need Legal Liable coverage.

If you’re renting a property and a tenant gets seriously injured, they may sue you fatal injuries and damages. Your personal liability insurance on your policy likely won’t cover damages to tenants who live there for an extended period of time. Your homeowner’s insurance carrier did not sign on for that risk, and there is a high chance of denying the claim and you must face the legal consequences.

3.You May use Your Umbrella Insurance Coverage Void

Umbrella coverage is important and cheaper. One of the reasons it’s cheap is that it only goes into effect after other kinds of insurance have paid out their maximum claims. If a tenant sues you and you don’t carry landlord insurance, your umbrella carrier may resist paying the claim as well. Their lawyers would argue that you were negligent in not obtaining the basic landlord coverage, and therefore misrepresented your true risk profile to them.

4.You Need More Liable Coverage Than Homeowners Insurance Typically Provides

Most homeowner’s insurance policies limit personal liability coverage to a few hundred thousand dollars. But landlords frequently face lawsuits with damages that amount to much more than that, particularly when negligence is involved. Landlords typically need at least $1 million in liability coverage.

Increasing your overall liability coverage from a couple hundred thousand dollars to $1 million may cost you a few hundred dollars more per year. The immense difference in protection is worth it, however, in that it will provide sufficient coverage for the vast majority of lawsuits and other legal actions.

5.You May Need Legal Assistance

If you’re embroiled in a landlord-tenant legal dispute or are being sued by a tenant, your homeowner’s insurance carrier may not cover your legal costs. Their policies are limited to non-landlord tenants, which have a very different risk profile.

The costs of legal representation can easily run to $50,000 or more. Most landlord insurance policies provide help with legal defense, including a “duty to defend clause,” that’s specific to cases that arise as a result of activities related to managing rental real estate.

6.Protection From Government Regulation-Related Lawsuits

Standard homeowners insurance doesn’t provide coverage for housing discrimination lawsuits or problems arising from disputes over the Americans with Disabilities Act, the Fair Housing Act, state regulations or anything else. Landlord insurance carriers understand that these disputes occasionally happen, even with landlords who never intend to discriminate. They therefore design their landlord insurance coverage with this in mind.

7.Protection From Tenants Who most Hazardous to property and you!

Suppose you have a tenant whose dog bites a child. The average dog bite claim is close to $30,000, but few renters would be able to pay that much. Many plaintiffs’ lawyers will go after the landlord, knowing where the pockets are deepest. If all you have is a homeowners insurance policy, and you file a claim, you’re going to have problems with your insurance carrier the moment they find out you have a renter.

Also Lost Income Is Covered If Property Becomes old and inhabitable.

Many landlord insurance policies come with fair rental income insurance that will cover your lost income if your tenants have to move out because they can’t live in the dwelling anymore due to it being inhabitable.

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