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Renting your apartment, home or commercial building can be profitable. Deciding to rent allows you to generate income from a valuable asset. It’s important, however, to insist that renters obtain renters insurance coverage. This insurance reduces your risk of loss.
Earning a return on your asset
Purchasing a property can require a large investment. In addition to the cost to buy the property, the owner needs to perform maintenance and obtain insurance on the home or building. For many people, a property investment may be their largest investment.
If all or part of a property is sitting vacant, the owner can earn extra income by renting. A rental agreement can generate income on a home or office that would otherwise be empty. This article explains how to limit your potential liability if damage or injury occurs at your rented property.
Potential risks
When you decide to rent your home or commercial building, you need to address several types of risk. Keep in mind that your property insurance may only cover the building’s structure. This type of policy covers damage or loss due to fire, tornado and several other types of natural disasters.
A property insurance policy typically does not cover a renter’s belongings inside the building. If a renter lives in you home and owns artwork, your property insurance policy will not cover any artwork damage. Property insurance protects the structure itself from loss.
What renters insurance covers
All tenants should consider purchasing renters insurance. This insurance policy can cover personal belongings in a rented home or business. In addition to clothing, a tenant may have expensive jewelry, furniture or artwork. Renters insurance can protect these items if they are damaged or destroyed by fire, tornado or some other unexpected event.
Acceptance Insurance provides a list of items that may be covered by a renters insurance policy and this may be useful for you in your search.
If you rent a facility for business, you also have assets that need to be protected. A manufacturer, for example, may have expensive raw materials and equipment in a rented factory building. A rented dress shop will have an inventory of clothing. Renters insurance can cover the cost of these assets if they are damaged or destroyed.
A tenant may also have liability for visitors to the rented home or office. If a guest falls and is injured at your home, a renters insurance policy can cover medicals bills, up to a stated dollar amount.
The same risk applied to business owners. Assume that you rent space for a restaurant. During the winter, a guest slips coming into your dining room and is injured. The renters insurance policy may cover a portion of that individual’s medical bills.
Other insurance considerations
You may want to consider other insurance policies beyond renters insurance. Many individuals and businesses purchase umbrella insurance. You can think of this policy as extra insurance- an insurance policy that kicks in when other insurance coverage has been used up.
Say, for example, that the person injured at the restaurant has serious injuries. They incur large medical bills. An umbrella policy can cover the medical bills over and above the limits placed on your renters insurance. If your renters policy covers the first $500 in bills, the umbrella policy can cover the amount over $500.
If you rent your home or commercial building, require your tenant to purchase renters insurance. Their policy may help reduce your liability, due to property damage or injury at the rented property.
Additional cost but very beneficial in the end..
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I am about to move to college, and I am going to be living in a new apartment. I am worried about having potential problems, and I think it would be really good for me to get insurance. Then I could get coverage for various things that are in my apartment, such as my items and the apartment itself. For a fairly simple insurance plan, where do you suggest looking? I don’t need anything that is too extensive!
Pauline, for a space that is being rented for by a company how would the insurance there work? I ask that because my father is thinking about renting an empty space that’s already been built and insuring it. The thing that we’re somewhat working out with is trying to figure out how much the insurance will cover.
I didn’t realize that property insurance would only cover the structure. My husband and I are looking into getting some investment properties in the near future. I will have to show him this article so that he understands why we’ll need additional coverage!
Great information about the importance of renters insurance. The added cost will certainly be worth the protection. Thanks so much for sharing.
Thanks for the information about renters insurance! I actually didn’t know that this existed until I read this article. Like you mention, renters insurance can protect personal items if they’re damaged or destroyed. That would come in handy!
An insurance agent will help you figure out what type of policies are necessities and which policies you possibly would want to add on top of that. They can help answer any questions too. Great information.
Hey Pauline !!
Great information.Landlords, like most business owners, are in business to make a profit and protect their assets. One key component of Risk Management is the transfer of risk through insurance and responsible property owners properly insure their property against general liability and property exposures. What is commonly overlooked is the transfer of risk through a tenant’s personal liability policy. Tenant liability products protect them from third party claimed damages caused by fire, smoke, explosion or water as a result of their negligence. These causes of loss tend to be the most expensive damages an apartment building owner would face.
Keep sharing !!
have a great day
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