If you want to invest in rental property, there are many factors that you have to take into consideration. There are issues to do with how much rental income you should expect, the expenses to be incurred on an annual basis and how to ensure that the property stays in good condition at all times.
One thing that you just can’t afford to overlook is insurance. There are so many risks that are associated with rental properties and the only way to protect yourself from huge losses is to ensure that the property has the right insurance coverage.
Insurance protects you from damages caused by your tenants, natural calamities or any other factors. Of course, there are many types of insurance cover and it’s up to you to ensure that you choose what is right for your property. If you are not very conversant with these matters, you can get some useful information from this guide to rental property insurance.
Here are five reasons you need insurance when investing in rental property:
1. Minimize financial losses
We have seen the damages that can be caused by disasters such as hurricanes and tornadoes. If your property is hit by any of these disasters, you are exposed to massive expenses including the cost of property demolition, debris removal or even rebuilding. The only way to protect your property and save yourself from incurring these costs is to insure that you have insurance cover for your rental property.
2. Protection from tenant lawsuits
Rental property insurance can protect you when you want to sue tenants who have not paid rent or have maliciously damaged your property. Suing tenants can be a very costly affair. From having to pay lawyer fees to not being able to collect any rent during the period of the suit, there are so many reasons to ensure that you have the necessary insurance protection.
3. Tax rebates
Rental property insurance comes with the benefit of tax deductions that can save you a significant amount of money that you would have to pay as tax. The premiums you pay for all insurance options will be deducted from your income before it is taxed.
4. Protection from injury liabilities
A visitor can be injured while on your property. There are many instances when people have sued rental property owners for the cost of treating injuries incurred while on their property. When you have the right insurance, it can cover such costs.
5. Break-ins
In this era of high insecurity, the risk of a break-in is always high, even with additional security measures. If a person forcibly gets into your building and steals property or causes damages, the only way you can avoid the subsequent losses is by having rental property insurance.
Whether you like it or not, there will always be risks involved when you own a rental property. You can be relaxing on holiday only to receive a call telling you that your property has been badly damaged because of one reason or the other. The only way to protect the property and have peace of mind is to insure it against the inherent risks. Insurance is not just necessary, it is absolutely vital.