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Insurance is a widely accepted concept for a reason. It serves as a fallback when something unexpected happens, such as a considerable loss or an accident. In the rental industry, both landlords and tenants alike have benefited from one form of insurance or another, but it’s important to understand which one provides the safety net you need.
Two of the most common types are landlords' and renters' insurance, so what makes them different, and who is responsible for paying for them?
Landlords Insurance
What It Covers
Landlord insurance typically covers the repair costs for the investment property, provided that accidents or natural disasters, such as fire, lightning, wind, hail, or floods, caused the damage. This ultimately depends on the kind of insurance you purchase.
Note that flood damage is sometimes only covered when it’s caused by an accident within the rental property, such as burst pipes or rain damage after a storm. It’s essential to research your options to determine which one is best for you. If your property is in a high-risk area for floods, for instance, additional flood insurance may very well be worth the extra cost.
Liability is also covered by most landlord insurance policies, wherein it can pay for another person’s medical bills or legal expenses if you are found responsible. An example is negligent maintenance leading to tenant harm. In most insurance policies, loss of rent is also covered.
How Much and Who Pays For It
The landlord pays for the insurance policy, given that the protections it provides are primarily for the property owner’s benefit. The cost that determines your premium relies on several factors, such as location, property value, age, condition of the property, and the type of coverage.
Renters Insurance
What It Covers
A renter’s insurance policy will cover a tenant’s personal property, particularly the cost to repair or replace their belongings. Which items are covered will depend on the insurance policy. Just like a landlord's insurance, it also covers liability claims.
Since not all incidents are the landlord’s responsibility, this can be particularly helpful when tenants need to cover the costs. The insurance can be used to cover medical bills or legal costs in the event of an accident that occurs within their rental unit.
San Diego landlords can legally require tenants to acquire renters' insurance as part of the lease agreement. While this might deter some applicants, it’s a smart move to prevent potential disputes in the future should an incident occur.
How Much and Who Pays For It
Tenants pay for renters' insurance, as everything it covers is to their benefit. The average monthly rate for premiums is $16 in San Diego. The choice of which insurance policy to get may fall to the tenant, as it provides them with more choice despite the lease requirement.
Preventing the Need for Insurance with Professional Management
Insurance is a smart practice and is something you are advised to get, but your main goal is to never be in a situation where you or your tenants have to use it. While some things are unavoidable, like natural disasters, many are preventable.
With efficient and professional property management, many circumstances that require insurance claims can be avoided. With Investment Safe Property Management, we can work together to make that happen.
Contact us today, and we can help you protect your investment!