Owning investment property in Phoenix can be profitable and lucrative. However, it can also be risky. Landlords take on a lot of liability, and they want to be sure one of their largest assets is protected.
Insurance is essential.
Today, we’re explaining what kind of insurance you need as a landlord, and why.
Insurance is Part of Risk Management
Landlords need a risk management process, and insurance is a good place to start. You might find yourself needing to repair or replace your property after a catastrophic event. Or, you could be sued by a tenant or a tenant’s guest and you’ll need to defend yourself legally. These are just some of the reasons that insurance is so critical.
Property insurance is mandatory. You need to be able to repair or rebuild your property if it burns to the ground. Make sure you have enough insurance on your property to cover the costs of building it again from the ground up.
Note that this is different from the homeowner’s policy you have on your own home. A landlord policy will protect the structure and its systems, but not the personal belongings inside the home. That’s the tenant’s responsibility, and it’s one of the reasons that strongly encourage renter’s insurance. The landlord policy also protects you in tenant and third party liability suits.
Make sure you include your Phoenix property management company as an additional insured. If something terrible does happen at your property, the tenant or the affected parties will likely sue everyone that they can. While property managers maintain their own professional liability insurance, having everyone on the same page is an important way to establish a credible and unified defense.
Vendors Must Be Licensed and Insured
Vendors and contractors who work on your property must be licensed and insured. Allowing someone that you hired off the street to work at your investment home will invite liability and expenses. If a worker gets injured while repairing your home and there is no insurance in place of his own, you’ll be paying medical bills and additional pain and suffering damages for years. Don’t increase your risk by working with any vendors who are not fully insured.
Renter’s Insurance for Tenants
Renters insurance benefits your tenants because it covers their personal belongings. If a tree crashes through a window during a bad storm and their electronics are damaged, they’ll need renter’s insurance to cover the replacement cost. There’s also a liability element to renter’s insurance policies. If your tenant causes damage, your property insurance would cover it, but if it’s the tenant’s responsibility, they should be held accountable by paying for it with their own policy. This will keep your premium lower and your claim report clear.
This is just a basic overview of what you need to know when it comes to landlord insurance in Phoenix. Hopefully, you have a great insurance agent who can help you review your policy and make sure you’re protected. If you need a referral or a little extra help, please contact us at Service Star Realty.