One major question, as a landlord that you should be asking is the vacancy clause. Most landlord policy's state that if a unit sits vacant for more than a certain amount of days then several items are not covered. For example, an owner of a condo in Kansas City informed me that his unit sat vacant for over 60 days ...While vacant, the unit was broken in to and all the appliances, furnace and hot water heater was stolen. When reporting the situation to insurance, they refused the claim due to the fact the home had sat vacant for too long to be covered. Most insurance companies will ask for the most current lease on the home when reporting a claim.
Another mistake I have seen landlords make is choosing a high deductible or large blanket policy's for larger portfolios. Investors should estimate costs such as roof replacements, siding repairs etc before settling on a higher deductible. You can bet that most weather related damages on buildings will have to come completely out of pocket, when they could easily be covered by insurance for just a few dollars more.
The most important thing to do when establishing a policy is to ask your agent how your coverage would handle every scenario possible and then have them show you the verbiage in your policy that backs up their answer...suggestions would be:
Water damage from flooding vs from resident neglect (pipes freezing, etc)...what is covered, what is not?
A/C damage due to criminal activity (removing copper from units) Are you covered?
Vacancy period for full coverage...after that period, what is the coverage's?
Fire restoration-What is covered? Appliances covered?
For my residents....Renters Insurance is a NO BRAINER!! Not only do most management companies require coverage upon signing of the lease, there is no better return on your investment than having a renters policy. First of all, it's easy...most of your car insurance companies can add this policy to your current policy for approximately $15-20 more per month . Stand alone policy's are also offered by all insurance companies. Keep in mind, that in the event there is major damage to your unit, whether it be weather related, fire or water damage, most policy's will cover hotel stays or temporary housing in addition to replacement of your personal belongings. Again, as with the landlord policy's make sure you understand all the coverage's and make sure your deductible is going to be affordable for you if something does happen.
Recently, a young couple left town over the holiday's and turned off their furnace to save on the electric bill. While away, the temperature went below freezing and the pipes burst. The owner was relieved to know that they did indeed have renters insurance, however, later they found out that the policy did not cover busted pipes due to negligence, so the young couple had to come out of pocket over $5000 to cover the repairs to the unit.
For anyone living in the Midwest or owns investment property in this region, there is no doubt that spring/summer storms and tornadoes are upon us. Call your insurance agent today to make sure you are properly covered. Make sure your property management company is aware of your policy coverage's as well so they can report any damages in a timely manner to your insurance company.
If you have questions about this topic, feel free to contact Meridian Realty & Property Management for more information and referrals for reputable insurance agents that specialize in investment property.
Crystal Vaughn
Owner/Broker
Meridian Realty & Property Management LLC
#ManagingPropertyForAGreaterPurpose
