[The following is a guest contribution]
OK, so you know that you need rental property insurance to protect your investment once your tenant moves in. But do you know how to get the right coverage without spending an arm and a leg?
Fear not! It IS possible to get great rental property insurance at rates that won’t blow your budget up. All you have to do is follow these 5 tips:
1. Make sure you qualify for as many insurance discounts as possible
In many cases, the price you see attached to rental property insurance coverage ISN’T the price you have to pay. If you meet certain requirements, you can get discounts on your monthly premium payments.
Having things like smoke alarms, dead bolt locks, an indoor sprinkler system, and a home security system make insurance companies happy. After all, these things are used to prevent catastrophes — or, at the very least, minimize the damage. If your rental property has them, the insurance company will see your property as less of a risk for filing a claim, and they’ll reward you by charging you less!
You can take these discounts one step further and forbid your tenants from smoking inside the house. Having a “no smoking” clause in your lease will also qualify you for a discount on many policies!
Your age may even qualify you for a discount! Some rental property insurance rates are lower for senior citizens, so talk to your agent about anything and everything that could save you money before you sign on the dotted line.
2. Take full advantage of tax deductions
Did you know that the money you spend to generate a rental income — either through owning the property itself or tenating the property — counts as a tax deduction? Luckily, your landlord insurance premiums and deductibles fall into this category! So, when you prepare your tax return, be sure to include all of those expenses. They could wind up saving you a bundle!
Just remember — any money you recover in an insurance payout will count towards your assessable income. So, be sure to take BOTH sides into account when it comes time to file your taxes!
3. Compare a variety of options
Because there are so many different insurance companies and so many different policy options, rental property insurance rates can vary widely from policy to policy. So, just like you would with any other important purchase, be sure to do some comparison shopping before you sign on the dotted line. That way, you won’t have to sit around and wonder if you’re really getting the best deal!
Just be sure that your comparison is a detailed one — meaning that you go beyond the premium price. After all, a sub-par policy may be cheaper now, but if you ever need to file a claim later, it could wind up costing you a fortune!
4. Get your rental property insurance coverage from a company you already work with
Most insurance companies will offer a “loyalty discount” if you buy more than one policy from them. So, if the company that handles your car insurance also offers building insurance for rental properties, talk to them first. If they’re willing to give you a discount, the final price might beat out all of those other rates you’ve seen elsewhere!
5. Make sure you’re covered for malicious damage
At first glance, it may seem strange that ADDING coverage to your rental property insurance would actually make it cheaper, but stay with us. Even if you wind up paying a little bit more in premiums, you’ll wind up saving big money down the road if you ever need to file a claim.
For example, if one of your tenant’s guests steals the TV you’ve provided or damages all of the stainless steel appliances you just had installed in the kitchen, your rental property insurance will foot the replacement bills. But if you didn’t have malicious damage coverage, you’d have to pay for all of these things out of your own pocket!
Photo: David Hilowitz