As real estate investors ourselves, learning how to save money on a rental property is crucial to the game. But, sometimes it’s not all about saving money. It’s protecting yourself from any accidents that might happen to your tenants on any of your properties. The good news, with the proper insurance policy, you are covered if anything should go wrong. However, as you might already know, landlord insurance policies can be pretty pricey. Therefore, learning the right landlord insurance tips can save money as a landlord and protect your tail from any future liability issues. This can allow you to reap even more benefits as an investor. Especially when you have the right property management team to help you along the way.
First: What is the difference between Homeowners and Landlord Insurance?
If you believe your homeowner’s insurance will cover your rental property, you are mistaken. Landlords who turn their homes into rental property may be confused with the difference between homeowners and landlord insurance. Rental agreement length and rental frequency are an important thing to consider when determining if homeowner’s insurance is a better option than landlord insurance. For example, if you have a home that you are temporarily moving out of for a short period of time, then your current homeowner’s policy may cover the tenants living there. The policy could cover certain damages such as a fire or break-in. Depending on the type of policy, some insurers won’t grant a valid homeowner’s insurance policy if you are not living in the home. A local agent or a real estate expert will be able to help you understand the type of outcomes that may or may not be covered by the insurance policy if you were renting your home to tenants. If you plan on renting the property to long-term individuals, then landlord insurance will be needed. Landlord insurance will typically cover the whole property from damages such as fire, water, wind, and/or hail. Homeowners insurance and landlord insurance are very similar but with some key differences including:
- Coverage of personal property. Homeowners insurance may cover personal belongings such as furniture, clothing, and other household items like a computer. Landlord insurance will typically cover items used to service the property. These may include landscape tools to maintain the property or certain appliances.
- Liability coverage on the property. Typically, landlord insurance will cover your liability related to the rented property. If a landlord is found legally responsible for an injury that happened to the tenants in the home, their insurance may help pay for the legal fees or medical expenses.
Policies will differ depending on the insurance company. Depending on what you are looking for as the landlord, you may choose to just have a standard policy that covers basic building damages (fire, flooding, burst pipes, wind, etc.), additional structures like a shed and/or garage, and landlord liability insurance. More extensive policies are available as well with coverages for additional damages and hazards.
Saving Money on Landlord Insurance
If you’re a new landlord in the arena or have been one for some time, you know that landlord insurance isn’t cheap. When comparing the price for landlord insurance to homeowners’ insurance, you can expect to pay up to 15% to 25% more! Luckily, there are some ways you can save money on a landlord insurance policy.
- Shop, shop, shop like its black Friday. Getting the best deal on landlord insurance can mean spending a lot of time shopping around. It’s no surprise that policies vary from insurer to insurer. If you are currently with an insurance provider, see if getting a quote from another company lowers your current expense. If not, it may be time to find a new provider.
- Look for discounts like you’re a coupon clipper. As you’re shopping around ask different providers about the discounts that may apply to you. These different discounts may include new customer discounts, multi-policy discounts, loyalty discounts, renovation discounts, referral discounts, and group discounts. Additionally, ask your current insurance provider if you may be eligible for any of these discounts and they may requote you a better deal.
- Add property safety features as if you’re a mall cop. Improving the property’s safety and security may get you a better deal on landlord insurance. This is because you’ve become less of a liability in the insurer’s eyes. Updating the property’s smoke alarm and burglar alarms, adding/updating security cameras, adding motion light sensors, and installing deadbolts or sprinklers can lower your risk as a landlord and ultimately get you a better deal on insurance.
Remember to not only ask about professional group discounts but also ask if you qualify for a discount membership.
Encourage Your Tenants to Purchase Rental Insurance
Remember, landlord insurance will not cover the tenant’s personal items and belongings. Renters insurance is a cheap and easy solution to protect your tenants from any risk of losing any personal property in an accident such as a collapsed tree or a fire. When you sign a new tenant, you should add renters insurance as a condition in the lease agreement. This may protect you from future liability issues that may happen in an accident. Not to mention your tenant’s assets as well. Encouraging your tenants to purchase a renters policy to cover their items can benefit and protect both parties in case of an emergency.
Don’t Over File Claims
There is a limit for how many claims you may file before your landlord insurance company starts charging you more or cancels your policies altogether. So, one of the best ways to save on landlord insurance is not to file unless you really have to. Filing claims can add up quickly, especially if you own a lot of properties that you rent to tenants! There are cases when filing a claim is more important to do than in other cases. For example, if a person alleges they were injured on the property then this would be a scenario where you would want to file a claim as a landlord. But, other cases like water-damage that is under $10,000 would be a claim you wouldn’t want to file. The reason being, when a property is damaged by water, uncertainties about mold developing in the future will cause some insurers to cancel your policy. We understand that it can be tough dealing with all of the nuances as a landlord. Finding the best landlord insurance policy can be a time consuming and lengthy process. This time takes you away from investing and building up your portfolio in other properties costing you even more money! Wolfnest is a property management company that takes away the headache of dealing with all the baggage that comes with renting out your real estate investments. And get this, we save you more money than the other guys. Being real estate investors ourselves, we can help you with expert advice and great property management services. Contact us today and let us know how we can help you!