Investors choose the real estate rental business because of the passive income it generates. However, as with all investments, but it also comes with risk. The good news is that an investment property insurance policy can protect against many of those risks.
Because the property can only generate income when it’s habitable, property damage coverage is non-negotiable. It provides payment to repair the damaged property either on a named-perils or all-risk basis.
Another important component to a policy for a rental property is liability coverage. This protects the owner or owners who are sued, lessening the chances that the property is seized to pay a judgment or legal expenses.
Rental Loss Income
If a building is unoccupied due to a covered loss, rental loss income insurance can replace the rent. This provides the property owner with a way to pay taxes, mortgages, and other expenses while the property is vacant under particular circumstances.
Since rental properties often need improvements and repairs, a builders’ risk policy provides coverage while the property is under construction. Once the work is completed and a certificate of occupancy issued, builders’ risk would no longer apply.
Vacant Property Coverage
There are may be times when the property is unoccupied. During these times, the property is more vulnerable to vandalism and arson, so vacant property coverage is a smart solution to cover those types of losses.
Real estate is a significant investment. The right insurance coverage can protect that investment, making it a smart bet for many investors.