We’ve all heard, and likely felt, that there’s an increase in the rental market lately. With homeownership rates remaining low, dipping lower for some areas, it’s no wonder that the rental market is becoming stronger and that rental vacancy rates are getting lower. As the vacancy rates go lower, typically the prices go up. For the property owner or investor with potential rental units available, this potential revenue stream sounds very attractive. In fact, many industry analysts predict that the rental market will remain strong over the next five years.
Many non-investors and property owners are catching the bug it seems. It’s becoming so much so that we’re now getting calls for “Landlord” Insurance – a term we’ve never really heard or used in this Insurance industry, namely because it doesn’t exist.
What does a landlord need?
For starters, do your homework. Before you jump into the world of rentals and property management, in addition to checking with your team of trusted advisors (banker, financial advisor, accountant), it’s a good idea to check with your insurance agent before you sign the check for that property or begin building your apartment building.
You’ll need to discuss risk management with your insurance agent. Just as with any commercial business you will need to make sure you are adequately covered. What are you potentially held liable for and what might you need to change in your current Liability Insurance policy?
If you currently own the property or dwelling that you’re considering renting out, do you need to add additional items like Fire and Hazard Insurance?
If you’re building a new building for your rental units, there are additional factors to consider. What type of construction is it? Will you need to have a sprinkler system? Special materials? Will your property be staffed?
What about your renters? Will you require that they have renters insurance? Should you? Our answer is yes, you should. It lowers your risk and makes your renters responsible and accountable for their actions.