When it comes to insuring rental properties many people are not sure what exactly they are insuring and how it differs from a regular homeowners policy. There a few things to look for when evaluating a policy.
Dwelling Coverage: This part of the policy is the same as a homeowners policy in that it covers the dwelling up to a certain limit in the case of a fire, or any other loss to the structure. There are two types of coverages you can go with; replacement cost value (RCV) or actual cash (ACV). RCV is full replacement coverage. So if there is a total loss or a partial loss the policy will cover it fully to replace the damaged property. If you select an ACV policy then they reimburse you to the depreciated amount, which will typically not be enough to replace or repair the structure. The difference of course is price. The ACV is much less than RCV because of the lower amount of coverage.
Personal Property: People often overlook this as they think there is not any property to insure. What they don’t realize is the appliances is considered personal property so always good to have at least $10,000 of coverage. It’s very inexpensive and if something happened you would be glad you had it.
Business Income or Loss of Rents: This is a crucial coverage, as it covers rent if there is a fire or loss that makes the home unlivable and the tenants have to leave. The policy will reimburse you each month for the loss of rent up to the policy limit. It also an inexpensive coverage so good to beef that one up also.
Price: Of course this is what everyone is looking for but make sure you are getting the right coverage above the absolute best price. There are some carriers that specialize in rental properties, so make sure to shop it around. If you have a business and you have 15 or more properties there is a carrier that is unbeatable. That is all they insure so they have the system down and the price is the best out there.
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