You might have a home contents insurance policy to protect your home, but if you’re renting out one or more of your investment properties, you need to protect those too. If a fire breaks out at one of your properties, you’ll lose a valuable source of income – your tenants.
Sadly, by the time you finally get another tenant(s) to fill the vacancy, you may have lost 2 – 4 months worth of rental income. But if you protect yourself with a landlord insurance policy, you can greatly reduce your financial losses.
How much Does Landlord Insurance Cost?
Most landlord insurance policies have an annual premium that’s factored from a percentage of your annual rental income, which can be as low as 1.25%.
So if your monthly rent is $4,500, here’s a look at how much your premium would cost:
$4,500 monthly rent X 12 months X 1.25% = yearly premium of $525
Keep in mind that many landlord insurance providers have a set minimum for a policy premium, usually $250.
What Will Landlord Insurance Cover?
Once you take out a landlord insurance policy, you’ll gain coverage for a variety of incidents. Depending on the type of claim you’re making, you’ll need to pay a deductible of about 1 – 2 months’ rent.
Here’s a list of incidents most landlord insurance providers cover:
- Absconding Tenant(s): When your tenant(s) decides to leave without notice, skipping out on rent and forcing you to find another tenant quickly.
- Rental Default: When your tenant(s) cannot pay afford to pay their rent because of retrenchment, debt, etc.
- Lost Rent from Property Damage: When tenant(s) damage your property, making it difficult to rent out.
- Lost Rent from Inaccessibility: When a manmade or natural event blocks access to your property.
- Lost Rent from Murder/Suicide: When you cannot get a tenant because your previous tenant committed murder/suicide on your property.
- Lost Rent from Death of Tenant: When your tenant dies on your property rendering it unavailable for immediate rental.
- Eviction: When your tenant(s) won’t vacate your property until you get the legal authority for eviction.