Today we are talking about the property insurance requirements for landlords. This is a complicated topic, so we are breaking it out into two parts. This blog is Part One, which will be a general explanation of the insurance you need when you’re renting out your property.
You need insurance that will cover your physical property. This type of policy covers you if your building burns down. The insurance coverage will allow you to replace it. We recommend that you check your policy every couple of years to make sure your coverage is adequate. If your building does burn down, you’ll need enough money at today’s replacement cost to rebuild it. You also need to make sure you have code upgrade coverage. For example, if you have a building that was constructed in the 1930s, the codes are a lot different now. That means the rebuilding process would need to be done differently. Review the policy with your insurance agent every couple of years to ensure you have adequate coverage on the property.
Good landlords need an insurance policy that includes strong liability coverage. When you think about it, buildings are risky places. People fall down stairs and there’s always the potential they will hurt themselves. If you own a building, liability coverage is critical to your financial health. In San Francisco, we recommend a minimum of $1,000,000 in liability coverage. That sounds like a lot, but it doesn’t go very far. Buy a policy with enough liability coverage as well as wrongful eviction insurance. Don’t forget to name your property management company as an additional insured. We’ll talk about that more in the next part of this blog series.
When you’re talking to your insurance agent about what you need, make sure you’re covered for building and property replacement, liability and wrongful eviction. If you have any questions before you speak to your insurance agent, please contact us at Gordon Property Management, and we’d be happy to help you.