Pointers
for Landlords: Protecting Your Investment
 Owning
a rental property may sound like a great way to make
money easily, but it comes with its own headaches. Take
the right precautions, as a Realty Times article suggests,
and you will stay happy with your investment.
“It’s a higher risk to own
a tenant-occupied property,” says Mary Eblen,
owner of Allstate Insurance Company in Encintas, Calif.
Sure, being a landlord sounds easy – you sit back
and watch the money pile up. However, there are also
a lot of liability issues that come with owning a rental
property. Eblen says that when you become a landlord,
taking vital precautions is critical.
On the top of Eblen’s list is
making sure you carry a landlord insurance policy instead
of a homeowner’s policy for the rental and making
sure your renters carry a rental policy. Often, neither
party has the right amount of insurance. According to
a survey by Agents and Brokers of America, almost two-thirds
of the people living in rental properties do not have
renter’s insurance. “The landlord’s
policy really protects you for issues such as a fire.
If there was a fire, the tenant obviously couldn’t
live there any more and couldn’t pay rent, so
the landlord’s policy would pay fair loss of rent.
In other words, if it took six months for the home to
be fixed due to the fire, the policy would pay six months’
rent until the tenant could get back in,” explains
Eblen. The landlord’s policy also covers not only
the dwelling but also events like the tenant suing the
landlord and loss of rent for certain incidents.
When you own a rental property, you’re
not facing liability from just the tenant. Landlords
can also face liability issues from under-insured workers
performing repairs on the property, aggressive animals
and slip and fall accidents by the tenants and their
guests. Eblen strongly urges landlords “to make
sure they have the adequate liability limits…
They’re not there every day and the odds of something
happening at the property are higher [than if they were].”
Here are a few tips if you are or considering
becoming a landlord:
• Require that your renters have
renter’s insurance. If renters had adequate insurance,
liability issues for the landlord might decrease, such
as if the tenant had an aggressive dog.
• Hire a property management firm to screen your
tenants. Doing this yourself can be time-consuming and
difficult. An expert will have knowledge of running
credit reports and background checks. It is also an
essential step to preventing future problems. Renters
with a good history are less likely to cause problems.
• Ensure that your property is protected for vandalism
due to the tenant not taking proper care of the home.
• Ensure that you have insurance that covers you
for fair rental loss, such as the incident described
earlier.
• Make sure you have adequate limits of liability.
Of course, it’s critical to protect your property,
but it’s equally important to protect other assets,
“because a tenant or a tenant’s guests,
if they were to trip and fall…they may come after
not only that property but also may come after the rest
of the assets the owner may have,” explains Eblen.
When looking for insurance, remember
to carefully examine and discuss the policy terms, as
coverage and eligibility requirements vary. Eblen suggests
coverage for general liability, property and excess
or “umbrella” excess liability protections.
Being a landlord can become a lucrative investment,
but only if you take the right steps to ensure minimal
problems.
<<
Back to Home
|
