Finding the Right Policy for Your Investments
By Larry D. Hudson
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If you think property and casualty insurance for investors is an unsexy topic, you’re not alone. People seldom talk about their insurance coverage, except when things go wrong and they need to make claims.
 
That is, of course, exactly why insurance coverage is important, even if you don’t find the topic exciting – because when disaster strikes, you’re either adequately covered or left to fend for yourself.
 
Insurance agents Rodney Hines and John Holmes gave attendees a guided tour of the subject during Greater Dayton REIA’s Third Wednesday meeting for August (8/16/2017). The Farmers Insurance representatives had this advice for investors: There is no “one size fits all” coverage for your investments. Different situations call for different policies.
 
Example: If you purchase a home to rehab, even with the intent to hold and rent, don’t add it to that landlord policy that covers your other rental property. At least, not until you have a tenant in the property or a signed lease.
 
“Vacant houses require special coverage,” Holmes told the meeting. That also applies to any other rental property after a tenant moves out.
 
“If your property is vacant for more than 60 days, your landlord policy won’t cover you,” said Hines. You could be at risk of loss in case of fire or vandalism.
 
Often the larger risk associated with rental property is the potential liability for the property owner due to the injury of tenants or guests, Hines and Holmes said.
“This is why tenant policies are important,” said Holmes.
 
“It’s not just a matter of insuring the tenant’s personal property in an apartment or house,” added Hines.
 
The advantage of tenant policies is the liability coverage that’s included.
 
“Without a tenant policy, anyone suing the landlord for a loss will aim for the landlord policy,” Hines said. “The tenant policy can cover certain legal claims against the property owner,” he added.
 
Both speakers suggested that landlords make sure that tenants take out tenant policies – either by requiring the purchase in leases, or by taking out the policies for tenants and including the cost of premiums in the rent.
 
In either case, landlords should take care to the listed on the policies as “additional insured.”
 
“Doing that keeps the property owner in the loop. You’ll know if the policy lapses, and you know the status of any claims,” Holmes said.