Investing in rental property can be a lucrative asset class, which is why it’s all the more important to have adequate insurance coverage in place to protect yourself and your investment from potential losses, claims from a tenant, or even a potential lawsuit. Here are a few things to keep in mind as you evaluate insurance needs for a property investment in Columbus.
Minimizing Risk
Property owners are required to carry several types of insurance policies. Before deciding on the specific policies, you need for your investment(s), it’s recommended to consult a professional insurance broker who can offer input specific to your business and personal interests.
From a risk and liability perspective, it’s also generally advisable to own your rental investment properties as a business entity or LLC as a way to shield your personal assets from any business-related risk.
Lastly, another important way to protect yourself and your investment property is to require your tenants to have a renter’s insurance policy. Renter’s insurance protects a tenant’s personal property in the event of a fire, theft or other disaster. It also reduces your liability as a property owner.
Insurance Coverage Options for Property Owners
In addition to a traditional homeowner’s insurance policy that protects the building and its contents from perils like fire, theft, vandalism, and natural disasters, here are some commonly recommended types of insurance policies property owners should consider keeping active:
- Liability insurance – This protects against claims for bodily injury or property damage that occurs on the property, be injury that to tenants, guests or anyone else who comes to your property.
- Loss of income coverage – If your property is uninhabitable for an extended period due to a covered loss, loss of rent coverage helps recoup some of that income by reimbursing you with the fair rental value of the dwelling during that time.
- Flood insurance – Standard property insurance typically doesn’t cover flood damage. If you’re concerned about flooding at your property, consider obtaining a separate flood insurance policy.
- Umbrella insurance – This is an additional type of coverage that offers protection beyond the limits and coverages of your other policies. It can be especially beneficial for properties with a higher risk of liability claims.
Taking the time to annually review insurance coverage is a good practice to ensure coverage limits are adequate to cover the property’s value and potential liabilities. You might also choose to shop around for coverage regularly to compare costs and coverage levels.
Protecting your Franklin County rental property with adequate insurance is important to the ongoing success of your investment. If you have questions about insurance for rental properties or any aspect of owning and managing a single- or multi-family investment in Franklin County, please call us anytime at 614-725-3059.
