Insurance Tips for Rental Properties
Here at Fey Bruder Insurance we insure a number of rental properties and on occasion we are asked by clients if we have any insurance and risk management tips when it comes to owning a rental property. When asked we always mention these five things:
1. Temperature Requirement in the Lease:
It is a good idea to include a clause in your lease that requires the tenant to keep the heat no colder than 59 degrees. This is important because around the Holidays many tenants will travel and if they want to try and save a buck they may turn off the heat. Pipes do not enjoy this especially with a polar vortex threatening again this year. This way, if they do turn the heat off and pipes break you can pass that damage on to the tenant.
2. Renters Insurance for Tenants:
Since you may have passed on the risk of pipe freezing damage to your tenant you then want to make sure they have insurance in place to pay for such damages. Requiring tenants to have renters insurance is a good idea. Not only does it protect their contents (which are excluded under your policy), it protects your property if they are negligent in causing damage to your property. I would recommend they have liability limits at least the value of your property.
Know your states laws on dog attacks. For example, in Kentucky there was a law recently passed that could drag landlords into dog attack claims. This may make it difficult to get insurance for a property that has a dog. If you are going to allow dogs to live on your premises it is best to limit which kinds as some insurance policies exclude coverage for "vicious dogs".
4. Loss of Rents Coverage:
Make sure your rental property insurance policy includes coverage for loss of rents. If you sign a year's lease with someone and then have a fire a month later, you are going to be out 11 months of rent or at least however many months it takes to rebuild the house. You can recoup this loss with loss of rent coverage. Also, make sure that you have enough loss of rent coverage. Many polices give you 10% of your dwelling limit or give you a flat $25,000. Add up your annual rents and make sure you have enough coverage.
5. Certificates of Insurance from Contractors:
Unless you yourself are handy, you may be employing contractors to do fixes around your rental property. We strongly recommend you ask these contractors for proof that they have insurance. If they were ever to cause damage to your tenant’s contents or to your tenant’s person, you would want to make sure they have insurance to cover such things.