Insurance For Your Rental Property
Thinking about renting out your house? Here are items to consider.
Buying property here in Central Kentucky can be a very appealing investment! Rental prices are higher than ever, and there is no shortage of qualified tenants. Here at Castle insurance we often work with homeowners who are acquiring additional properties to rent to others. This can be a great way to create residual passive income through an investment that will often appreciate. In most cases, a consistent stream of additional income can help you reach your retirement goals a little easier. We are always excited to help our customers reach their financial goals, and one way we can do this is to ensure your rental property is covered.
Before you consider investing in a rental property, there are a few things that must be considered. There are several situations where rental properties can become a serious liability; one that can severely hinder your assets.
First, we recommend that a landlord establish an LLC to ensure their assets are separated from their business operations.
Secondly, ensuring your tenant keeps an up-to-date renters policy will help to protect you from any liability that arises from their actions. For example, if your tenant’s dog bits someone visiting your rental, their renter’s insurance liability will cover damages incurred up to their limits of liability. Without renters insurance, a lawyer may choose to challenge you for the damages, and a costly lawsuit can be devastating for you and your business.
Another great coverage option is a personal or business catastrophe liability policy. This policy is often referred to as a PLUP or umbrella policy and can provide millions in liability coverage for your auto and homeowners policy. While your rental property should be insured as a rental-dwelling, your policy may not contain enough liability coverage to offset a litigious tenant. Even those landlords who are mindful oftenant screening and property upkeep, the unforeseen lawsuit can ruin your ability to run a profitable operation.
In closing, renting property can be a profitable long term investment. Managing the insurance for this type of business can be confusing, but you should always understand what you are covered for.
If you rent property here in Kentucky, please contact us for a comprehensive review of your insurance, and let the expert agents at Castle protect your assets.