If you are in the business of renting properties or fixing up a property with an intent to rent, you need to take a look at some important insurance considerations, conditions, and policy exclusions in an effort to safeguard your property and assets. As a landlord, you usually advise your tenants to purchase renters insurance, but what about your invested interest in the property? Below are some common coverage concerns for landords to keep in mind when purchasing rental property.
When you purchase your property, make sure you discuss your plan(s) to renovate, if there are any, with your local Alabama independent insurance agent. This will ensure your property has the adequate coverage protection it needs along with safeguarding the rental property during repairs and renovations. If you purchase a property that requires little to no repairs or updating, then proceeding to rent it is perfectly acceptable. But remember, communication with your local Alabama independent insurance agent is key.
Some situations of purchasing a property and renovating it with the intent to rent may require a special form dwelling fire policy. This time of insurance protection is frequently used to insure Alabama residential rental properties, so it is essential you discuss this type of insurance along with the conditions, provisions and exclusions that accompany it.
Some Typical Coverage Scenarios for Landlords to Assess
- You purchase a property and begin the renovations yet in an effort to save money, you turn off the heat. One day in January, your pipes freeze which causes a significant water-related claim. Now keep in mind that although freezing is a covered peril, coverage is excluded if you fail to keep the heat on. Without the proper type of coverage options, you, as the landlord, will be responsible for these related damages out of pocket. Coverage for freezing applies if you maintain the heat in the property so perhaps paying a little more for utilities will save you money in the long run.
- Your property has been vacant for 90 days when your rental property was vandalized, and some items were stolen from the residence. Typically, theft, vandalism, and malicious mischief are covered; however, if the property has been vacant for 60 or more days, coverage is excluded.
- Your property has been vacant for 6 months while you renovate, but you did not realize that in many cases, vacant properties can only be insured on a specific, limited peril basis (basic form coverage). You find out when your coverage for a claim has been denied. If you had kept the lines of communication open with your Alabama independent insurance agent about the expected time frame of your renovations, you would have been advised of this. Furthermore, there are other insurance options available to expand the coverage while the property is vacant.
Keep in mind that once the renovations are complete and you have a tenant ready to move in, you can adjust the insurance coverage to a standard rental dwelling insurance policy.
- Water related losses caused by flooding and drain/sewage backup are excluded for all rental property insurance policies, regardless of vacancy, so additional coverage will need to be considered if you want the adequate protection for these types of losses.
If you have any questions or concerns regarding coverage considerations for landlords, contact us at Burkett & Associates at 256-704-7400. We are here for all your Alabama insurance needs so don’t wait. Call us TODAY!