Today, my guest is Curt Bullock from Bullock Insurance Brokerage, who is here to talk about insuring your investment property. Whether they are novices or long time veterans, people often ask us about the best coverage for their residential property.
Landlord Policy vs. Homeowner’s Policy
Make sure you have a landlord policy and not a homeowner’s policy. If you’ve been living in the property and you move out, it’s essential to change from your homeowner’s policy to a landlord policy. Call your insurance broker, and let them know it’s not your primary residence anymore. If you don’t do that, and the house burns down, you could have a problem collecting on a claim. When it becomes a business and not a home, you need new coverage.
Types of Coverage Investors Need
Liability coverage should be at least 1 million dollars. Within that, make sure you have coverage for bodily injury, fair housing discrimination, and in addition, you want to make sure you have coverage for loss of rental income. If there’s a fire and your tenant moves out, your insurance company will pay for loss of rental income. When the property is uninhabitable, you won’t have the cash flow stop.
Other coverage you want to have includes coverage for eviction expenses. If you have to evict a tenant, you can make a claim to pay for the eviction. In California, there is a new law called AB-551. It entails bed bug remediation. This is coverage you want to have in case you end up renting to a tenant who brings bed bugs into your property.
Single Family Homes vs. Multi-Family Units
There’s a difference between the type of insurance you’ll buy on a single family home and a multi-family property. A townhouse or condo has an HOA policy which covers the outside of your unit. You still want a landlord policy for the inside of the property, however. If your tenant gets hurt or makes a claim over smoke or water damage, you have the coverage.
Your insurance broker should take a consultive approach. We look at a number of companies and the property and we find the best policy. We want to protect your rental property.
This is an interesting topic and industry. If you own rental property, you need to consult with a professional. Please contact us at Stokley Properties for more information.