This past winter was a difficult one for a lot of landlords in northeast Ohio. I’ve seen ice dams, water backups, freezes on houses while tenants were away. And damages ranging from a few hundred dollars all the way up to $30,000 plus in terms of what insurance would pay.
So I figured now would be a great time to talk about insurance for landlords.
In the past, here at Realty Trust Services, we didn’t always require owners to provide us with copies of their insurance policies. However, we’ve learned from experience that it’s vitally important that owners have a copy of their policies on file with us. That way, if we have an emergency, we aren’t having to make a guess about which contractor use and delaying essential services that need to take place ASAP to stop any further damage to the property.
If we’re not sure what contractor to use and we’re calling around trying to get in contact with a property owner late at night or get in touch with an insurance agent about what’s covered and what’s not… that’s eating up precious time and potentially costing everyone more money.
Not an ideal situation at all.
So, by having that policy information available, we can make better informed decisions.
Regardless of whether there’s a policy on file or not, the first step is normally doing whatever may be necessary to prevent further damage to the property. Then there’s restoration. Information makes both much easier, more efficient, and more easier to afford.
One thing that we offer here at Realty Trust Services— that we recommend to other property management companies— is a 24-hour dispatch for emergencies. If something happens, we’re ready to go and we have a network of contacts with restoration contractors that work with insurance companies. That’s proven to be invaluable for us.
A while ago, we started contacting owners and asking them questions about their insurance policies for our database. As it turned out, most of them didn’t really have very good information about what their insurance even offered. They didn’t know the deductible— what they paid out of pocket before the insurance kicked in— or what their insurance covered and they didn’t know that they weren’t covered at all when their property was vacant. Some didn’t know if they had insurance at all.
Which is to say that now might be a good time to call up your insurance agent and have them look at your policy to find out what’s on it.
One thing that’s nice to have is loss of rent coverage. It’s a little more expensive, but, if you can get it, at least if something happens and you lose rent for 5 months, you’ll have a cushion.
Another thing you really need a firm grasp on what happens when a tenant moves out because coverage changes and— more often than not— you need a new policy for a certain period afterward.
And you should make it a priority to find out if the policy has water damage coverage because we do have a lot of issues— especially with older homes— with water in northeastern Ohio.
There’s no getting around the fact that sewer backups happen. Roots grow in the drains or what have you. It’s just the nature of owning a home in this area.
Insurance is a classic issue for landlords because a lot of insurance underwriters don’t even want to touch rental properties. It’s a specialized niche and you definitely want to find an agent that has some knowledge and can assist you and educate you a little bit about what you’re getting and what you should get.
Something we’ve just recently added as a standard policy— based on our experiences— is that we’re requiring all tenants to have tenant insurance. Here at Realty Trust Services, we offer tenant insurance through our software. It’s quite a nice policy and it runs between $9 and $15 a month. So it’s a nominal fee that enables us to make sure that the tenant has named the landlord in the policy.
And for owners, there’s even coverage for damage to your property caused by tenant negligence.
Let’s say, hypothetically, that there’s damage to the roof from a storm which causes the house to leak and the tenants have to go to a hotel. You can set up a policy so the tenants aren’t asking you to pay for that hotel stay.
Having that insurance in place keeps you from getting sued for the price of that hotel stay. And the possibility that the tenant might sue— in some instances— to be reimbursed for that trip, even if you’re not contractually obligated to provide for that.
So you can certainly see the appeal of insurance in that case… and there’s a lot of cases that are very similar to those circumstances.
Insurance companies have learned the hard way that some tenants will use tenant insurance as an ATM machine to get money for their stuff in situations like the one above. So the insurance companies have stopped providing for that and personal belongings are no longer covered.
For all of those reasons and more, we strongly recommend any owner— whether they’re with Realty Trust Services or not— require tenant insurance. It just makes good sense.
If you’re unsure about your insurance policy, the team here at Realty Trust Services would be happy to refer you to several professionals that can give you quotes and talk you through the best policy for your needs contact us today by calling (440) 220-7300 or click here to contact us through our website.