Tuesday, May 10, 2016

What You Need To Know About Landlord Insurance

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If you own a property or building, the chances are you might give them for rent to tenants. Nevertheless, renting your home or building comes with a lot of risks for investment property owners, which is why many people go for landlord insurance.

But what is landlord insurance? Like any other insurance, landlord insurance provides cover for properties which you are renting out to tenants. This insurance covers a lot of incidents but can be broadly categorised into the following:

•    Default on payment of rent
•    Damage to the property
•    Liability for any injury caused to the property

One of the biggest risks that any landlord can face is the risk of defaulting rent by the tenants. Whether any tenant does that willingly or accidentally, this can create a huge impact on your income and as each month passes by your financial situation becomes much worse, since it can affect your mortgage payments. Obviously, if this goes on for long enough, you can ask your tenant to move out and look for a new one but this takes a lot of time and by the time you are done with this long procedure, you have already suffered a huge financial loss.

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So to overcome this problem, many landlords opt for the best value landlord insurance which can significantly reduce your risk from defaulting tenants. Some insurance policies cover the loss of rent during the period when the property is uninhabitable such as during fire accidents, flooding etc. But this policy does not cover the loss against the arrears of rent by tenants. In order to protect yourself from such kind of loss, you will need rent guarantee protection in your rental property insurance policy. Such protection allows the landowner to receive payments when the tenant is unable to pay the rent temporarily. This provides time for the landowner to think about the eviction and if the tenant is evicted, even then the landlords are covered for that period.

So before choosing the best value landlord insurance to make sure you get the rent guarantee protection included in your insurance policy which will help you to be protected from a severe financial crisis. For more information about landlord insurance and its coverage contact SGUA.

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