At one time, most of us have had the experience of renting a property. As new investors, you?re likely familiar with these policies, but often, renters (due to income level, perception of safety, or inexperience) neglect the purchase of rental insurance meant to protect them from unexpected events.
Jason Hartman recommends renter?s insurance because it protects against damage or theft to personal property, reduces liability in the event of a guest injury in a rented space, and covers temporary living expenses should something happen to that space. A wise decision, certainly?but what about rental insurance? As a property owner, there is something to protect you, too.
Imagine a situation in which a somewhat-unruly tenant fails to shovel a driveway?it rains, and the combination of frozen snow, water, and low temperatures creates an ice rink on the sidewalk leading up to the entrance. The tenants have ordered a package, and the delivery person isn?t paying attention. They slip, fall, and injure themselves. This service person is certainly not responsible for his or her injuries, but who is? Ultimately, it could be the landlord. This situation is scary, but, as a property owner, you?ve taken the necessary precautions.
Rental insurance, while a bit costly, offers a level of protection that many property owners find reassuring. Accidental damage, damage in the event of some natural disasters, and tenant or visitor injury on the property are covered?including legal fees. This is important as these situations take away a significant amount of income from rental properties. This type of insurance can also cover any items owned by the property owner that are present in tenant occupied dwellings. Most importantly, rental insurance can provide protection against loss of rental income in the event that a property owner is unable to secure tenants.
Fortunately, rental insurance is tax deductible and often covers as many as five properties per policy, a great bonus for those with diverse investment portfolios. Also covered is the property manager, should you choose to delegate management responsibilities to a third party.
And if you know enough to have diversified your investments, you almost certainly know enough to be a wise investor. By looking after yourself financially and insuring the properties responsible for building your wealth, you are safeguarding yourself against potential dangers in the investment community. In the long run, shelling out for insurance is a decision that will pay off for years to come. (photo credit: Pahz via photopin cc)