At Ali Safavi Real Estate we get asked the same question all the time: what kind of insurance do I need for my property. This is a topic that doesn’t get discussed as much as buying or maintaining a property, but it’s one you should fully understand — because it could save your pocketbook bigtime.
Technically, you do not HAVE to have insurance. There is no law that says it. However, if you are borrowing money, the lender may require a basic policy. Though buyer beware, this policy may not protect you if you’re not the primary tenant.
Forget what is required of you by law. You want to protect your property from liability. The first type of insurance you should consider is building and property insurance. This protects the building from unexpected damages. Roofs and plumbing can be extremely expensive to fix out of pocket. This gives you some padding and protects your pocketbook.
Next, liability insurance is not a bad idea to have. You, as the landlord, are technically responsible for your tenent’s saftey. If they trip over an uneven sidewalk and break their leg, guess who they are going to sue. You!
There is insurance called loss of income and business. Basically, if you fall ill or get injured, this money kicks in to help make sure you don’t lose income during that time. I know especially young people have a sense of invincibility, but it’s one of those things that you’ll be super greatful for if you ever need it.
Make sure to be super clear on what your property insurance covers. For example, it probably doesn’t cover natural disasters. So if you live in an area that is prone to flooding or tornados, you probably want to add that to the list.
There is such a thing as landlord insurance. It’s typcially a la cart and lets you choose what times of protection you want. Best to not go at this one alone. If you think it’s something you want, make sure to speak with your insurance agent.