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    3 Types of Insurance That You Need as a Landlord

    Landlord-tenant law on an office table
    Many homeowners decide to turn their former homes into rental properties instead of selling. Perhaps you are unsure as to whether you want to permanently leave your home, or maybe you want to expand your investments. Regardless of the reasons behind your decision to become a landlord, you need to make sure that you have the right kind of insurance policies.

    You are putting your home and potential income at risk if you neglect to purchase the correct policies or purchase the wrong type of policies as a landlord. To ensure that you get the best premium on your policies, consider purchasing all your policies from an insurance company with comprehensive offerings, such as Rowell Insurance Agency.

    Here are three types of insurance that you may need to purchase once you become a landlord. If cost is a concern, talk to your insurance agent about increasing your deductibles. This is a simply way to keep your premiums at a manageable level.

    1. Landlord's Insurance

    Once you become a landlord, you must swap your homeowner's insurance for landlord's insurance. Homeowner's insurance is for customers who use their homes as their primary residences. Your homeowner's insurance policy can refuse a claim if damage or incident occurs when you are renting your property because the policy doesn’t cover renters.

    Landlord's insurance comes in three different levels. A DP-1 landlord’s insurance policy is the most basic level of coverage, while a DP-3 policy offers the most comprehensive coverage. DP-2 coverage varies significantly based on the policy. Be prepared to pay more for a DP-3 policy due to the additional protection.

    Talk to your insurance agent to see which level best fits your needs, as the answer depends on the specific details of the DP-3 policy and any other insurance policies that you may have. For example, the agency could find it’s more cost-efficient to drop your other policies and use the proceeds to purchase a DP-3 landlord policy.

    2. Flood Insurance

    Don't assume that purchasing a DP-3 landlord insurance policy negates the need for flood insurance. Many DP-3 policies specifically omit damage caused by floods. You may believe that you only need flood insurance if your live near a flood plain or high-risk area. However, this fallacy puts your property at risk.

    Only a few inches of rapid rainfall could flood an area, potentially damaging your property.

    When you purchase flood insurance, you have the option to customize your coverage. Dwelling-only insurance only covers damage to your home. A policy that also covers the contents will pay for damage to your furniture and appliances as well as property damages. If you decide to rent your home fully furnished, you may prefer to purchase a policy that covers the contents.

    3. Umbrella Insurance

    Your landlord's insurance policy does offer a certain level of liability coverage. However, situations may occur where your liability exceeds the limits of your landlord's insurance policy. Should this happen, you can utilize your umbrella insurance policy. Without umbrella insurance, you face losing your property, savings, and belongings.

    Umbrella insurance acts as a catch-all product in cases where a court finds you liable for damages in a lawsuit. It does not kick in until you exhaust the limits of any other applicable policies. For example, assume that you neglect to service your home's plumbing system. Water leaks into your rental home, causing severe health problems and expensive hospital bills for your tenants.

    Your landlord's insurance policy offers $500,000 worth of liability coverage, but a lawsuit rewards your tenants $1 million. The umbrella policy will cover the $500,000 that exceeds your landlord's policy.

    Concerned that your insurance coverage is lacking? Request a free quote from Rowell Insurance Agency today so that we can go over all your insurance needs.