Can You Save Money On Rental Properties Insurance by Not Having Loss of Rent?
Many people wrongly assume that they can decrease their costs with rental properties insurance if they don’t take coverage for loss of income. They might indeed pay a little bit less, but the importance of this coverage type is huge.
It is really worth to pay some extra pennies for ensuring your financial stability in case you lose your rental income.
When Is Rental Properties Insurance with Loss of Rent Coverage Needed
You might be relaxed knowing that you already have rental properties insurance and that whatever might go wrong is under cover. This might be true, but if you don’t also have coverage for loss of income, you might end up in financial trouble. Imagine that you own four condos in an apartment building. A fire takes place in one of them because the tenants weren’t paying attention to what they were cooking. The firemen arrive in a matter of minutes, tenants are not hurt, but the fire needs to be ended. The result is that the firemen use water for doing this and besides damage from fire, you’ll also have damage from water. You won’t worry too much because insurance is going to pay for the repairs.
This might be true, but repairs are not made in a blink of an eye. You need time to find contractors and to obtain building permits and you also depend on weather. Usually the repairs are going to take at least two months. They can even last half a year or more. Unfortunately, tenants can’t live in your condos anymore and you won’t receive any money until the building is done. You’ll have to find new tenants and even though the building might look perfect, the six or more months without rental income might have been devastating for you. If you have to pay mortgage, the bank is not interested in the fact that you have lost your income.
Having coverage for loss of rent can prevent this from happening. In case something happens to your property, you will receive your normal income from the insurance company until the repairs are done. This would be a great relief.
How to Truly Save Money on Rental Properties Insurance
You don’t have to give up on proper coverage in order to save money on rental properties insurance. The premium that you have to pay is strongly connected with how risky your properties are. There are insurance companies specialized in high risk properties. These might offer you better rates than others. However, make sure you go into business with a reputable insurance company.
You can also save money on rental properties insurance if you lower the risk associated with your property. You can do this by installing security devices, smoke detectors; alarms, sprinkles, etc. Don’t neglect the importance of fire escape places. Little details can make big differences when it comes to insurance premiums. Also keep in mind that the more claims you file, the higher your premium will be. Don’t file claims for little things that can be easily paid from the pocket. Ask your agent about more tips on lowering the cost of rental properties insurance.
By John Benson