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Landlord Insurance Policies

Landlord Insurance Policies

Chicago Insurance Advisors

With real estate values having generally plunged nationwide, coupled with the glut of available foreclosed properties, first time real estate investors are jumping into investment properties, often cash deals . As no lender is involved in these cash deals, the buyer, while wanting to minimize the cash outlay for his investment, might imprudently ignore the necessity of landlord insurance, leaving his investment and assets exposed.

Landlord insurance is a form of insurance covering a rental property from loss. It ordinarily covers losses to a building from fire, storms, explosion and vandalism. It may cover the landlords' personal property on the premises but not the personal property of tenants. It also covers landlord's liability for injury to third parties on the premises. Tenants can obtain inexpensive renters insurance which would cover their own contents and liability to persons injured in the tenants' unit.

A landlord's insurance policy is a specific policy for income-producing property, so it is not part of one's homeowners insurance. A landlord doesn't spend as much time in their rental property as they do at home. As they're not at the rental property as often, risk of loss is deemed to increase because tenants simply are not as concerned with the property as the landlord. From a tenant's perspective, the building they live in isn't their building so they need not concern themselves with its condition and maintenance.

If the investor acquired the property with the backing of a lender, that lender will require appropriate insurance and the lender will monitor the status of the insurance because the property is the lender's investment too. Should the landlord fail to pay the insurace premium, the coverage would lapse, placing the lender's investment at risk of total loss. The lender would then obtain its own insurance and pass the cost of that insurance over to the landlord but the key words here are "its own insurance." Lender would cover its own interests and not the interests of the investor, leaving the investor exposed to total loss. In either case, with or without a lender, sufficient insurance is crucial for the savvy investor.

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