Purchasing Landlord Insurance
Colorado’s housing market can be risky for first time home buyers, and in some metro areas, it is a wiser to rent vs. buy. Making it appealing to those who already own to take the leap and become landlords.
Perhaps you own a vacation home in one of Colorado’s many tourist destinations and intend to lease it out for four years to help pay for your child’s college expenses. Alternatively, you might be a real estate broker with a few vacant properties that could be bringing in income.
Many people in this situation are not familiar with landlord insurance and think that the homeowner’s insurance will protect them against property damage or liability. Whatever circumstances have led you to become a landlord, buying landlord insurance should probably go on your list of tasks.
Do You Need Landlord Insurance?
The answer is: Definitely. Carrying the right insurance is a key element in protecting your investment. Ironically, unless you have a mortgage on the home, is not required. For more on the companies, we write Colorado Landlord policies through check our insurance partners.
Landlord insurance provides coverage for losses that regular homeowners do not have to deal with, like being sued by a tenant. Landlord insurance may also provide coverages like rental income replacement and emergency appliance repair cost coverage.
The following are examples of very short term rentals (less than four weeks), or a tenant is sharing the home where you live. And may not require a landlord policy.
• You list your home on Airbnb for one weekend each year when for one of the many Colorado Festivals that happen near you each year.
• You rent out the basement of your home to a college kid.
• You have a beautiful cabin used for vacations that you let your friends use a few weeks each summer.
Homeowner’s insurers believe you are living in the dwelling insured and some offer added coverage or a second policy to cover seasonal homes. Homeowner’s insurance is probably okay in the situations listed above; be sure to discuss your options with a licensed insurance agent and make sure. Insurance companies may legally refuse to pay claims if the existence of a landlord-tenant relationship is not disclosed to them in the underwriting process.
Colorado Homeowner’s Insurance vs. Landlord Insurance
• Different pricing structure: Landlord insurance typically costs a little more than homeowner’s insurance, but provides broader coverage.
• Different risks: Landlord insurance covers the unique risks associated with a property that’s not your own home. Including vandalism or accidental destruction of property by a tenant or, a tenant suing you over a contract disagreement. A washing machine gone haywire can cause confusion with even the most well-meaning renter. They may ignore all the warning signs of a blocked outlet pipe until the machine overflows and water covers half the home.
• Rental income: Landlord insurance may provide you the rental income lost due the dwelling declared un-occupiable during repairs if those repairs are the result of a covered loss.
What Does Colorado Landlord Insurance Cover?
The primary coverage areas of landlord insurance are property, liability, and rental income replacement, in addition to extra options. Landlord insurance may include coverage for any items you keep on the premises, such as appliances, equipment or tools you keep on site and other structures like sheds that are on the property. For landlord insurance, get a quote here.
Liability Insurance for Landlord Policies
Most of all landlord insurance takes into consideration the additional risks you acquire when you put the property into a tenant’s hands:
• Personal injury coverage, if an injury to a tenant or their visitor results from an unsafe condition they feel is your fault and make a liability claim against you for medical costs. If they suffer property damage resulting from your negligence, they may also sue you for replacement costs. You are legally liable for issues like your tenant making a legal claim against you for entering without permission, illegal eviction, invasion of privacy, or debates over rents or deposits.
• Legal counsel, due to the various liabilities as a landlord, legal representation is an essential part of your financial security.
• Loss of Rental Income, Protects you against losing rental income if the unit becomes uninhabitable. Consequently, this insurance does not cover lost rent from eviction or vacancy, it must be actual physical damage covered by your insurance resulting in loss of rent while completing repairs.
Tips for Keeping Premiums Low and Mitigating Certain Risks
• Consider coverage decisions carefully based on your particular situation.
•Bundle your home, auto and landlord policies with the same company.
• Assuming more of the risk with higher deductibles, lower rates.
Having the proper safety measures in place may save money on your Colorado landlord policy. Therefore the following can lower the cost of your policy by minimizing your risk:
• Installing a sprinkler system
• Maintaining active burglar alarms
• Use gated or locked access
• Updated electrical inspection
• Inspect for mold
• Make the rental non-smoking for all tenants
• Require tenants to carry enough liability insurance to cover the dwelling
• Be sure to discuss filing any claims before turning them. Minor wind damage or water damage may be less costly if you repair them out of pocket. Hence filing claims can increase premiums when applying for new insurance.
Pride of Ownership
A well-maintained property will result in fewer headaches overall, and may also contribute to lowering your landlord insurance premiums. Maintaining your property well makes it is much easier to track how well your tenants are performing the required upkeep.
Last Updated on November 7, 2021 by Shawn Christie