Your income property is most likely your most valuable asset apart from your principal residence. It could be your primary or secondary source of revenue. Thus, it is important to protect your investment from risks such as fire, damage, or theft. The income you derive from your property also needs to be secured to ensure you don’t lose money.
So how does insurance for an income property work?
Your building
Your building will be covered for specified risks. It will be protected in the event of fire, lightning, windstorms, water main break and hail. In case of total damage, you can get money to rebuild your property.
Tenant Provisions
The furniture and equipment you provide to your tenants can be covered. Whether your property is fully-furnished or semi-furnished, your insurance policy can ensure you don’t need to spend a fortune to refurnish in case of damage or loss.
Civil Liability
You can never guarantee that no accident will happen on your property. Civil liability protects you in case someone gets injured while on your property. It can also cover damage which you could be liable as the landlord or owner.
Rental Income protection
The income you earn from your income property is important because it helps with your expenses, specifically your mortgage. But what would happen if your tenant goes into default, or if your property gets damaged and cannot be occupied? Basic coverage insures rental income for up to 10% or more, depending on the insurer. You can also increase the coverage of the policy up to its full value and your total rental income.
As you can see, insurance for your income property protects your property and your income, too.
Some insurance companies offer features to cover legal fees, sewer back-up, and aboveground water. You can compare different policies to find the right one for your needs.