Types of Insurance for Real Estate Investors
Having the right insurance policies is something that many real estate investors disregard, and although everyone hopes that they will never have to file a claim it’s always favorable to be fully protected in case something does happen. No one wants to find out that all the sewer backup entering their property isn’t covered by their policy.
There are several different types of insurance for real estate investors, some that are included in a regular policy and some that will need to be added. These include:
Hazard Insurance: Hazard insurance protects you from damage to your property as a result of a covered peril or theft.
Liability Insurance: Liability insurance is absolutely necessary. It provides you with protection against anyone who is injured as a result of something on your property. This can include anything from someone tripping over a lawn chair to a contractor being injured while renovating your home.
Loss of Income Insurance: Loss of income insurance is a must if you are renting out your property to tenants, though it is not very important if you are selling it to a homeowner. If your property is damaged to the point that it is temporarily uninhabitable, then loss of income coverage will cover you in the event that your business is interrupted.
Sewer Backup Insurance: As the name states, sewer backup insurance will protect you in the event that sewer backup enters and damages your property.
Flood Insurance: This is essential if your property is in a flood zone and still a great idea if it’s not. A typical policy does not cover flood damage and if you don’t have this coverage you will be paying out of pocket for the damages.
General Contractor Insurance: General contractor insurance allows you to get your own permits for making renovations to the property, while also protecting you from liability claims from employees or subcontractors.
Worker’s Compensation Insurance: This is needed if you have any sort of employees. This can include construction/maintenance workers, a receptionist, a property manager, etc. It protects you in the event that one of your employees is injured on the job.
Builder’s Risk Insurance: Builder’s Risk Insurance is beneficial if a property you purchase is vacant/nearly vacant or going to be immediately renovated. This protects against property damage to the construction material or equipment, theft, labor costs, perils, and other issues related to property being under construction.
Vacant Home Insurance: Vacant home insurance protects you while your property is vacant. Real estate investors need to note that 30 or 60 days after a house is vacant, a regular homeowners/landlord policy will no longer cover the home. Vacant home insurance offers several different types of coverage including protection against named perils, vandalism, liability coverage, and agreed loss settlement.
It’s important to make sure that you and your business are fully protected. Contact us if you have any questions and we will be happy to help.
AZ Insurance Team
600 E Baseline Rd. Ste B-3, Tempe, AZ 85281