Owning an investment property can be a great way to build long-term wealth. Not only will the property appreciate in value over time, but you will have a tenant that will slowly pay down your mortgage to you. While being a landlord and owning a property can be a great investment and way to earn some additional income, it is also a major investment that needs to be properly covered.
One of the best ways to protect your investment is by purchasing landlord insurance. This type of insurance is designed for individual that own investment or income-producing properties. This type of insurance will provide you with a variety of coverage types that can help to protect you and your investment.
Rent Loss Insurance
When you own a property that has a tenant, you will rely on the tenant’s ability to pay the rent in order to pay your mortgage, taxes, and other operating costs. One of the most important parts of any insurance policy is your rent loss insurance. Rent loss insurance will provide you with cash flow in the event your property is temporarily out of service due to a fire or other casualty. This will typically be included with your property insurance policy.
An additional type of insurance coverage that could be a good option is rent guarantee insurance. This type of insurance does not provide coverage in the event your property is damaged. Instead, it will provide you with coverage in the event your active tenant stops paying rent. This can provide you with a valuable credit risk that can make it worth the additional cost and your lender may require it.
When you own a rental property, you will be taking on some liability whenever you have a tenant in your property. Since you are taking on a lot of liability, having a landlord insurance policy in place that could provide you with additional liability coverage could be very beneficial. This will provide you with protection in the event your tenant, or a guest of your tenant, is injured while they are in your property.