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Asset Protection & Insurance: Is Your Bixby Rental Property Covered?

Filling Out Insurance Paperwork with a Model House in the ForefrontEverybody recognizes the fact that Bixby rental property owners must possess good quality insurance to protect their real estate investments. It’s impossible to prepare for every bad thing that may happen to your property; sometimes, something unforeseen happens. This is why insurance is important. However, it’s not as simple as walking into an office and asking for one. There are many different kinds of insurance, each with its own coverages and limits. That alone can make identifying which insurance you need quite a predicament. Landlord or Investor insurance, landlord liability, umbrella, and flood insurance are just a few examples of what’s for sale. Don’t let the complexity discourage you, though. Because, with insurance, you may sometimes think you don’t need it, but when you do need it, you REALLY need it.  Now, since different types of insurance are designed to protect different things, understanding the intention or purpose for each offering can help you to know which one best protects your rental property assets with the correct type and amount of coverage.

Unlike homeowner’s insurance, Landlord or Investment Property Insurance is intended to safeguard investment property. This type of insurance covers the rental home and usually exterior features, such as sheds or fences. Landlord insurance, however, does not cover your tenant or your tenant’s personal property. That means, if they brought in a television or a computer and that gets damaged, they wouldn’t be covered. This is why most landlords ask that their tenants purchase their own renter’s insurance policy and sometimes tenant liability insurance as well.

Landlord Liability insurance is different from Investment Property Insurance but is often included. This is due to the fact that this type of insurance covers losses related to damage, theft, or vandalism caused by tenants or their guests; it also covers liability in the event of an injury. This type of insurance is made not only to safeguard your rental home but also the financial aspects of your investment as well.

An umbrella policy is exactly what it seems like: broad coverage for a rental property that adds an extra layer of protection for individuals who own property or have an occupation that is prone to lawsuits. Since being a landlord fits both of these classes, it is worth checking out an umbrella policy to protect your assets if you are sued for damages in excess of your other insurance policies. These policies also typically protect the insured against loss of rent or damages to other people’s property or injury caused by others, such as a tenant. It also protects against vandalism and invasion of privacy. And on top of that, you are also covered against slander and libel.

To know how an umbrella insurance policy works, consider this illustration. You have a tenant that meets an accident and breaks a leg on your property. They sue you and the court awards them $300,000. Your other insurance covers up to $100,000 max. But who’s going to pay for the rest? That’s when your umbrella insurance policy comes in. It picks up where the other insurance leaves, covering the remaining balance of your obligation— the $200,000.

Bear in mind, however, that even an umbrella policy usually does not cover losses to your rental property due to a flood. For many reasons, flood insurance is usually offered as a separate policy that must be purchased through the National Flood Insurance Program (NFIP). This type of insurance typically covers the actual cash value (not the replacement cost) of the physical structure of the home and a detached garage, if present. Although multiple Bixby property owners believe that they don’t need flood insurance because their property is not located in a “high-risk” area, the fact is that floods can and do happen anywhere, and usually strike without warning. Regardless if it is from a burst pipe or an unusual amount of rain, floods damage and destroy homes on a regular basis.

With so many different types of insurance, it’s vital to examine your coverage amounts cautiously and make sure that you are not paying for insurance you don’t need, but also that the insurance you do have provides the right amount of coverage. Furthermore, acknowledging whether you have the right insurance coverage can be a challenge except if you have reliable industry experts on your team. At Real Property Management Tulsa, we can help you determine how to best protect your valuable properties and your financial well-being with the right insurance coverage. To learn more, contact us or call us at 918-532-7020 for more information.

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