How good is the insurance you have on your property? Unfortunately, many owners don’t find out until they go to use it. The best time to prepare for the unexpected and review your policy is before you need to file a claim.
1. Replace your policy with rental property insurance or landlord insurance.
Chances are your existing homeowner’s policy no longer provides the needed coverage for your rental property. If your insurance company is not aware the property is a rental, it can sometimes deny coverage if a loss occurs.
Rental property insurance provides liability and structural coverage for the home and its occupants. However, it does not cover tenants’ personal property in the event damage occurs via fire, water, etc.., so tenants should purchase renters insurance to cover personal belongings.
2. Ensure vacant properties are covered.
When properties are vacant sometimes water leaks, or things can happen in the property. In the Los Angeles area we don’t need to worry as much about frozen pipes like most of the country during the winter but water leaks can cause a lot of damage. Real Property Management East San Gabriel Valley had such an experience with a bursting water main. One of our agents visited the property to find water coming rushing into the back yard. They were able to see that the crawlspace had filled up and the entire flooring was soaking wet. Luckily being a client of Real Property Management East San Gabriel Valley we were able to get an insurance adjuster to visit the property the next day. After $40,000 worth of repairs had been done the property was rented out.
In general, more landlord-friendly coverage that protects vacant properties is generally available for no additional cost. As an owner, you simply need to find an insurance company that provides the coverage which best meets your needs.
3. Protect yourself against mold issues.
Another one of our clients who had a significant issue arise while tenants were living in the property didn’t check to see what was covered by their insurance. A small water leak between the wall of two bathrooms caused some molding which received a bill for $4,500. After several professionals visited the property the owner contacted their agent about paying the deductible and getting work done. The claim was denied because they didn’t have such coverage. This would have been covered by a $500 deductible if they had the coverage. Mold is always an issue to avoid and to get taken care of immediately, especially in rental properties.
Also, check additional coverage for earthquake and fire.
4. Choose replacement cost vs actual cash value.
When reviewing insurance costs, consider replacement cost coverage- Actual cash value may save you a few bucks up front, but is it worth it? This means damage would only be repaired based on the “actual cash value.” This meant the insurance company can depreciate the value of the damaged items; for example, seven- year old carpet will have a zero dollar value.
While one of these owners learned the hard way, now is the time to review your policy and learn from their experiences. If you have any questions please contact your insurance agent today.