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Residential Real Estate
Oct 17, 2022

Essential Insurance Coverage for Rental Property Owners

Sponsored Content provided by Dave Sweyer - Owner and Broker, Sweyer Property Management

Having the right insurance coverage is important if you are a rental property owner. There are several types of policies that you should consider, including dwelling coverage, personal property coverage, liability coverage, and loss of rent coverage. Each type of policy has its benefits and can help protect you and your investment. This article will discuss the different types of insurance policies essential for rental property owners and explain why each is important. We will also discuss renter’s insurance and why property owners should require their tenants to have it.

Dwelling Coverage

Dwelling insurance covers the dwelling itself and other structures on the property, such as garages and sheds. This coverage is essential for rental property owners because it can help to protect their investment in the event of damage from a covered peril, such as fire or windstorm. Without adequate dwelling coverage, a rental property owner could face a large financial loss if their property is damaged. As a result, it’s crucial to make sure that you have the proper amount of dwelling coverage for your rental property. Not having enough coverage could mean being on the hook for costly repairs or even having to rebuild your entire property.

Personal Property Coverage

In addition to a dwelling policy, rental investors should also consider personal property insurance to protect their belongings in case of damage or theft. This type of insurance can cover property used to maintain the dwelling and lot, such as patio furniture or any other personal property outside the home that has been rented to the tenant. In addition, if something happens to your personal property, such as damaged in a fire or stolen, personal property insurance can help you recoup your losses. Without this type of insurance, you would be responsible for paying for the repairs or replacement of your belongings out of pocket, which could be costly. Therefore, personal property insurance is an important part of being a responsible rental property owner, and it can give you peace of mind knowing that your belongings are protected.

Liability Coverage

Whether you’re new to real estate investing or a seasoned veteran, you understand the importance of protecting your investment. Although you may take precautions to prevent accidents and damage, the fact is that anything can happen at any time. That’s why it’s essential to have liability insurance in place. Liability insurance can help to cover the costs of legal action if someone is accidentally injured on your property or if you are found liable for damage to the tenant’s property. In addition, taking out a liability policy with the appropriate coverage can help protect yourself financially if something goes wrong.

Loss of Rent Coverage

Loss of rent insurance is a type of coverage that reimburses the fair rental value of the dwelling if the home itself is left uninhabitable due to a covered loss. Some examples of covered losses in North Carolina include fire, burst pipes due to freezing, theft, accidental overflow of water, and more. However, loss of rent insurance does not cover things like damage caused by rodents or domestic animals or repairs that have gone ignored and thus caused the issue to worsen. For landlords, loss of rent insurance can help minimize the financial impact of an event that forces tenants to vacate the property. Either way, it is important to understand what is and is not covered by loss of rent insurance before purchasing a policy.

What if my property is in an HOA?

When owning rental properties in homeowner’s associations (HOAs), it is imperative to understand what coverage the master insurance policy for the HOA provides. In most cases, the HOA’s master policy covers the exterior of the dwelling unit and the community’s common areas. However, this policy typically doesn’t cover anything inside the unit. Therefore, rental property owners must purchase supplemental policies to cover everything inside, from the drywall and flooring to the light fixtures and countertops. Even if your tenant doesn’t cause any damage, if there’s a fire in an adjacent unit and you don’t have coverage for the interior of your unit, you’ll be stuck paying for repairs. It is always better to be safe than sorry when protecting your investment.

Are there coverage requirements in NC?

Protecting yourself against potential liability claims is crucial as a rental property owner. While the standard liability coverage in North Carolina is $300,000, it’s advisable to purchase at least $1,000,000 in coverage. If you don’t have enough insurance and a claim is made against you, you may be responsible for paying the additional amount out of pocket. If you cannot do that, your wages could be garnished, and a judgement could be placed against your personal home or other properties. To avoid these potential consequences, it’s best to ensure you’re fully protected with a high level of liability insurance.

Should I require renter’s insurance?

There are many reasons why landlords should require their tenants to have renters insurance. For one, it helps protect the tenant’s belongings in instances of fire, theft, or other disasters. Additionally, renters insurance typically includes liability coverage, which can help cover the costs of any accidents or injuries on the property. Finally, by requiring renters insurance, property owners can help to reduce their liability exposure in the event of an accident or injury. How can someone else’s policy help protect you, the owner? In many instances, landlords require tenants to name them as an additional insured on the policy. Overall, requiring renters insurance is the best way to help protect both tenants and owners.

Being a rental property owner comes with many responsibilities, one of the most important being ensuring you have the right insurance policies. Understanding the different types of coverage can help ensure that your investment is protected in the event of damage or liability issues. In addition, requiring your tenants to carry renter’s insurance is also a good way to protect yourself, as it can help cover any damages they may cause. 

Do you have all the right insurance coverage for your rental property? Remember that while professional property managers can certainly guide you in the right direction regarding insurance, they are not insurance professionals. So, if you have questions about your policies, reach out to your insurance agent to ensure you’ve got the coverage you need. In addition, you can check out a recent webinar on the topic for some expert advice for rental property owners in North Carolina.

As a leading property management firm in the Cape Fear region, Sweyer Property Management recommends that property owners strongly consider working with a trusted and experienced property management company. Whether it pertains to the eviction process or another area of handling your investment properties, we want to make sure property owners and investors understand the relationship they are entering into when choosing to work with a property management firm. 

If you have investment properties and do not use a professional management company, we hope you consider doing so. The experts at Sweyer Property Management will be happy to provide you with a free rental analysis or, if you prefer, give us a call at 910-239-1338. 
Sweyer Property Management is a full-service professional property management company specializing in all aspects of rental management. If you're an investor or property owner looking to learn more about our services and what a professional property manager can do for you, reach out to us today at 910.256.3031 or via our website. Sweyer Property Management has exhibited continuous growth throughout the Wilmington, Leland, and Hampstead areas while maintaining an excellent Google+ rating for customer service. 

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