The Role of Landlord Insurance in Real Estate Investment 

What if you could protect your passive income and secure a better future for yourself and your family? 

If you are a landlord, then landlord insurance is vitally important. It offers a way of protecting your properties from the unknown, like the threat of fire, theft, severe weather, and more. Without such protection, a single unexpected catastrophe could negatively affect the business and lifestyle you have spent so long creating. 

Such a policy can help you protect your investments from threats you may never see coming until it is too late. How does it do so, and why is such coverage particularly important to every real estate investor, regardless of how many homes they own? Keep reading to discover the role of landlord insurance in real estate investment. 

Landlord Insurance in Real Estate: A Prudent Step for Long-Term Gains 

It is nearly impossible to overstate the importance of insurance for real estate investments. That is because the goal of every landlord is more or less the same. When you buy a property and spend the time and energy renovating it, you are hoping to see major long-term gains. In most cases, properties will continue to gain value over time. That growing value can help you potentially invest in more properties, even as it helps you charge more for rent over the years, effectively helping you pay off investment properties that much quicker. 

However, if something happens to a property that is not properly insured, it may sabotage all your long-term plans even as it erases your potential gains. After a fire, for example, you may be stuck with out-of-pocket expenses that eat into all your profits for that year and beyond. You will be forced to choose between paying for pricey repairs or selling the home at a loss, both of which will keep the property from continuing to develop value. 

Fortunately, the reverse is also true. With the right coverage in place, every real estate investor can protect their long-term gains by protecting the very properties they are counting on to continuously generate value. 

Home Insurance vs. Landlord Insurance: Which One Is Right for You? 

For newer landlords, one of the biggest questions is whether they should rely on real estate investment home insurance or homeowners insurance. After all, the latter is designed to protect real estate, and this is the kind of policy that protects the house in which you live. With that in mind, why would somebody rely on a separate policy altogether for their rental properties? 

The short answer is that homeowners insurance is designed to protect the actual home you live in, and landlord insurance is designed to protect the homes you rent out. It is a bad idea to try to protect rental properties with a home policy because it may not pay out when you file a claim. Even if such a policy would reliably pay out for rental properties, a home policy would be more expensive because it offers expansive protections that landlord policies do not. 

For example, while both policies offer liability insurance, home policies cover personal property, and landlord policies typically do not. Furthermore, whereas home policies offer loss-of-use coverage designed to pay for your living expenses if the home is rendered uninhabitable, landlord policies offer loss-of-rent coverage that pays out when damage to a home forces tenants to move out. 

Bottom line? If you are renting out properties, there are many benefits of landlord insurance compared to home coverage. 

Risk Management – A Core Benefit of Insurance 

As a landlord, it is important to protect your investments, and that means protecting your properties. This highlights the importance of insurance for real estate investments. The simple fact is that all your properties face countless potential risks each and every day, and the only effective form of risk management is a robust insurance policy. 

For example, the weather is increasingly unpredictable, and you never know when one of your properties could be damaged by wind, hail, lightning, or storms. Those properties could also be destroyed far too quickly by a fire. Fortunately, all of these grim possibilities are covered by landlord policies, offering you peace of mind regarding future unforeseen catastrophes. 

Additionally, landlord policies offer you liability insurance that can protect you from tenant lawsuits. Should a renter get injured on one of your properties and sue because they think it is your fault, this coverage will pay for your legal fees. That is significant because even successfully defending yourself in court can result in out-of-pocket legal fees, potentially leading to major debt or otherwise disrupting your finances in a way that significantly threatens your wealth. 

Legal Safeguarding: Liability Coverage Essentials 

With landlord insurance, you can get as much liability protection as you are willing to buy. That leads to an obvious question: just how much of this coverage do you really need? 

Many landlords begin with a million dollars in liability coverage, which is enough to cover most situations for those who own one to four properties. As you purchase more properties and tenants over the years, you can increase your coverage as needed. 

Evaluating Policies: Match Coverage with Investment Goals 

Everyone who rents out properties should have specific goals for their investment. For example, you may want to have a certain amount of rental income within the next five years, or you may have a goal of purchasing a certain number of additional properties within that same time period. 

Whatever your investment goals, it is important to get suitable landlord coverage. Once you have more than four properties, you should increase your liability coverage. Fortunately, you do not have to figure everything out on your own. With the help of the right insurance company, you can safeguard all your investments and meet all your most ambitious goals. 

Protect Your Investments Today with InsureOne 

Now you know more about real estate investment home insurance. This includes how it works, why it is beneficial, and how much of it you need to get started. However, do you know who is ready and willing to protect the future you have worked so hard to build? 

At InsureOne, we know how hard you have worked, which is why we protect landlords just like yourself with the most thorough coverage. Ready to pay less and get more from a policy customized to your exact needs? Then, it is time to get a quote online. You can also pick up the phone and give us a quick call at 800-836-2240. Finally, feel free to come find an InsureOne office near you.