Insuring your rental property in Carson is part of protecting your investment. There could be a fire that burns the property to the ground or an earthquake that causes major structural damage. If a tenant or their guest is injured at your property, you could be held liable.
Comprehensive insurance is a good business decision.
We’re providing a guide to rental property insurance in Carson because we know that it can be difficult to decide what type of coverage you need. We’re not insurance agents, but our extensive experience managing investment properties has given us a lot of insight into what type of coverage is absolutely essential. We’ll talk about insuring your property, protecting yourself against liability and loss of rent, and requiring renter’s insurance so your tenants are as protected as your investment.
How to Cover Your Carson Investment
Start with a smart partnership. You need an insurance professional who understands the unique needs of rental properties, and you also need a local insurance agent who understands the complexities of California laws and the unique risks that we face here.
A good agent has the best idea about what types of coverage will serve you and your property. You will come away with the peace of mind that your investment is completely covered.
It’s not enough to work with a great agent. You also need to review your coverage annually to ensure you’re protected in all the right ways. Property values change, and so do risks. If your insurance limits don’t keep up with what it would cost to repair or replace your property, you could find yourself at a serious disadvantage if the worst case scenario comes to be.
There’s also the matter of age and property condition. Your rental home is also getting older. You may need more or less coverage depending on these changes.
What Kind of Policy Do You Need?
Insurance for rental properties is crucial for several reasons. First, it protects your property. You want to make sure that if there’s damage or destruction caused by fire, water, storms, vandalism, or other unforeseen events, you have the resources available to repair your investment property. It’s also important to protect yourself against liability. There could be legal and medical expenses if someone is injured on your property. Essentially, you buy insurance for peace of mind. Rental property owners want to rest easy knowing that their investment is protected against financial loss.
Here are the specifics you’ll want to make sure your policy includes:
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Property Insurance
Landlord insurance is specifically designed for rental properties. It typically covers property damage and protects owners against damage to the building structure caused by natural disasters, fire, or vandalism. Property insurance primarily covers the physical structure of your rental. It’s essential to ensure your policy covers the physical structure of the home or the building. You’ll want to be able to file claims that will allow for the repair of damaged walls, roofs, floors, and other structural components. You need to protect the fixtures, too, whether we’re talking about built-in appliances, cabinets, or other permanent fixtures.
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Liability Insurance
Every investment comes with risk. Rental properties, however, are especially risky because an owner has people living in that home. There could be claims, lawsuits, and disputes.
A good rental property insurance policy will provide a comfortable amount of liability coverage. Talk to your insurance agent about the required or recommended liability limits. If something happens and you’re sued, you want to be protected from total financial collapse. Typically, we like to see one million dollars in coverage. This sounds like a lot, but you may need it to cover more than you might expect. It will help pay medical expenses for tenants who are injured at the property. It will also cover legal defenses and court judgments that might be won against you. Pay attention to policy limits and talk to your agent about including coverage for situations such as injuries, personal harm to the tenant, dog bites, accidental damage, and personal injury protection.
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Loss of Rent Coverage
Cover yourself for loss of rent. Always. Think about what might happen if the property you’re renting out is suddenly not habitable because of a covered loss. You won’t have rental income coming in if something happens and you need to move your tenants out of the home. That’s going to hurt your cash flow and your ROI.
A kitchen fire, a major flood from a burst pipe, or a sewer issue could require tenants to move out. An infestation of termites or rodents could create a situation where tenants have to move out for a few days. You don’t want to lose that rental income, and a loss of rent inclusion in your landlord insurance policy will ensure you are paid for those days.
Many insurance policies include loss of rent coverage, but it can also be added. This coverage is typically called Fair Rental Value Coverage. It will cover lost income due to your property being declared unlivable due to a covered loss.
Earthquake Insurance and Carson Rental Homes
Natural disasters are difficult to predict and expensive to recover from. Insurance can help.
The good news is that floods are unlikely. The National Flood Insurance Program (NFIP) administered by the Federal Emergency Management Agency (FEMA), designates Carson as a Zone “C” City (area of minimal flooding).
But what about earthquakes?
Always a danger in California. And, your insurance will cover only limited damages. For example, if there’s fire damage to your rental property that’s caused by an earthquake, your landlord policy is required to cover it. However, other damage to your home from an earthquake is not covered by your landlord policy.
It may surprise you to learn that in California, earthquake coverage is not required. It is, however, considered a good idea for rental property owners.
Earthquake insurance can provide security, especially for multifamily buildings with several units. There’s always a potential for earthquake damage, and we never know when a quake is going to happen. When there’s major damage, tenants will need to move out while repairs are made. Insurance can prevent a total loss.
Renter’s Insurance Also Protects Your Investment
Renters insurance has grown in popularity, and a majority of rental properties in Carson now require it. That’s smart, and here’s why:
- It’s affordable. This type of insurance is relatively cheap for your residents, which makes it easy to require.
- It provides a lot of protection for tenants. They’ll have fewer out of pocket costs if something does go wrong.
- It helps you protect your asset. Extra coverage always means extra protection.
As an owner, your own insurance protects you from liability, catastrophes, and loss of rent. Tenants need the same coverage.
Renters insurance is an affordable and easy way to bring tenants peace of mind. It’s important that tenants buy their own insurance to cover their possessions as well as any risk that can come from accidents or disasters caused by them.
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Renters Insurance Covers Personal Property
The most significant benefit of renter’s insurance is the coverage for a tenant’s personal property.
If there is suddenly a leak and the water damages valuable electronics, the renter’s insurance policy will cover the cost to replace or repair those things.
Under a property owner’s insurance, liability and the structure of the home is covered, as well as all the home’s systems. But a tenant’s personal property is not. A renter’s policy ensures tenants do not suffer a major loss if something happens at the home.
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Tenants and Liability Coverage
The renter’s policy will also cover liability for your residents, and this is something that a lot of tenants don’t realize they need. But when a tenant accidentally leaves the oven on or a bathtub filling, disaster can ensue. The result may be damage to not only your property but also to neighbors.
Who pays for that?
If it’s the tenant’s fault and the tenant has renter’s insurance, that policy will cover any damage.
This will save your tenant from a lot of out-of-pocket expenses, protect his or her security deposit, and provide some relief to you as the property owner because your insurance policy will not necessarily have to be involved.
Include the requirement for this insurance in your lease agreement. You can ask for proof that the policy is in force, and you can ask for documentation of the renewal when they renew their lease agreement.
There’s a lot more nuance to discussing insurance coverage because every property needs something different. What we’ve provided here is general guidance, but if you’d like us to take a closer look at your investment portfolio or a specific rental property in Carson that you own, we’d be happy to do that. Please contact us at Real Property Management Choice, and we’ll answer any questions you have while providing additional support and direction. We look forward to learning more about your property and your investment goals.
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