How To Get the Best Homeowners Insurance for Rental Property

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There are a lot of details to keep track of when buying an investment property. One of the most important things to consider is homeowners insurance for your rental property. If you’re thinking about buying or selling a rental property in Florida or around the country, it’s essential that you understand how this type of insurance works and what it covers.

Even if you don’t have a mortgage on your home, landlord insurance is almost always a wise purchase. It protects you against financial losses that may arise from natural disasters, accidents or liabilities that might arise if you rent out your home or property to someone else.

In this article, we’ll explain everything you need to know about getting homeowners insurance for your rental property around the country, and specifically in Florida, because this is where we invest most often at B2R Direct.

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Components Of A Standard Homeowners Insurance Policy For Landlords

Landlord insurance can protect against damage to your rental unit and any buildings on your property. It also provides liability protection, which is crucial if one of the tenants in your home gets hurt on your property.

Homeowners insurance for rental property will cover the costs of repairing or replacing damaged items and structures on the property. It will also cover rent loss due to a temporary inhabitable condition of the building.

Landlord insurance policies are generally more expensive than those for homeowners. Insurance premiums will typically cost about 25% more than standard homeowner policies.

Windstorm Insurance

A windstorm insurance policy gives clients protection against property damage due to gales, high winds, hail, and other hazards brought on by windstorms. The Insurance Information Institute reports that wind and hail are the leading causes of property damage. They typically result in roof damage but can result in other damage as well.

Windstorm insurance, while necessary in the event of a major storm, can be a complicated process. The details of the policy differ from one insurer to another, so depending on your insurer and where you live, deductibles and coverage limits could vary significantly. Florida doesn’t require landlords to get windstorm insurance but most lenders require it.

Flood Insurance

Flood insurance provides protection for your property in case of damage from flooding. The coverage is for the value of the physical structure of the property, as well as the plumbing, heating, electrical systems, and other attached buildings. Most homeowners insurance policies will cover damage caused by fire or theft, but they won’t cover damage from problems like hurricanes and torrential rain.

When it comes to flood insurance, the National Flood Insurance Program (NFIP) has helped provide affordable premiums. NFIP was established in 1968 to provide flood insurance to residents of Special Flood Hazard Areas (SFHAs). Florida is a participating member of the NFIP.

Some communities in Florida require flood insurance for landlords. Yet a lot has to do with the flood zone your property is in. If you live in high risk flood zones, you must purchase flood insurance. You can buy flood insurance through any insurance company in Florida. And if your community participates in the NFIP, both your building and its content can be covered. The cost of flood insurance in Florida is around $629 a year on average.

Septic Backup Insurance

When there is no flow from your house’s sewer line to the municipal sanitary sewer, it results in the backup of wastewater, also known as septic backup, water backup, or drain-line backup.

A septic backup insurance policy covers damages caused by standing sewage in the bathtub, toilet, basement, or anywhere else in the house. Damages caused by sewer backup are more common in areas with hills and valleys, and the resulting losses amount to millions of dollars each year.

Regular homeowners policies usually cover plumbing damages like burst pipes; however, the coverage does not extend to the sewage system. Flood insurance also does not cover flooding caused by sewage backup. To be covered for any type of damage from the sewage, you need to purchase separate septic backup insurance.

The Importance Of Homeowners Insurance For Rental Property In Florida

Florida holds one-third of all the policies within the NFIP. It is estimated that Floridians will pay $974 million in premiums for NFIP flood insurance in 2022 alone. This data is indicative of how important flood insurance is to Florida property owners. Also considering that Florida has had the highest number of windstorms in the United States since the 19th century, windstorm insurance is quite a big deal in the state. Septic insurance is also popular here.

As a rental property owner in Florida, you are at a higher risk of windstorms, hurricanes, and floods. And the right rental property insurance typically covers these occurrences. There is no gainsaying the fact you need to buy landlord insurance to help you mitigate losses due to property damage. This is due to possible vacancies that natural disasters may create.

Cost of homeowners insurance for rental properties

Homeowners insurance for rental property is typically more expensive than the run of the mill homeowners insurance. This can be linked to the fact that rental properties are treated as businesses by insurance providers. Using Bankrate’s rental property insurance cost calculator, you’ll find that average rental property insurance is expected to be between 20-30% higher than the average homeowners insurance.

In Florida, insurance premiums differ from county to county depending on whether the property is newly constructed or an old home. However, if it’s new construction, you can save over $700 a year in insurance premiums according to Zebra. Insuring a new construction home is 53% cheaper than insuring a 10-year-old home.

Image from Zebra - Average Home Insurance Cost by Insurance Type

How Much Liability Insurance Do I Need For Rental Property?

As a rental property owner, it is critical to have liability insurance coverage on your property. The liability insurance policy covers damages caused to third parties. You may be held liable for injuries suffered by someone on your property. In some cases, you may be required to compensate someone else for damage to their property.

Liability coverage is usually a standard offering in the average rental property insurance policy. Rental property owners often wonder how much liability insurance they need. The answer depends on your situation. If you are renting out a single-family home or condo, then your landlord’s insurance should cover any liability claims against you. However, if you are renting out an apartment complex with many units, you may want to consider getting additional coverage.

How To Find A Good Rental Homeowners Insurance Provider: What To Look For

A lot of times lenders have their insurance providers but also talking to property managers can help identify additional opportunities. The best homeowners insurance for rental property usually offers competitive pricing, full disclosure on coverages, superior customer service, and an easy claims process.

When shopping for the best rental property homeowners insurance, you should get rental property insurance quotes from at least three insurance providers. When reviewing the different offers, some of the things to look out for include:

1. Full Disclosure On Standard And Additional Coverage

When you’re signing up for a new insurance policy, you must know what you’re getting into. Homeowners rental property insurance policies are highly customizable, so you should know what your contract says. A good insurance provider should give you an insurance advisor to help you understand the confusing terms in the forms.

Homeowners insurance for rental property typically includes coverage for personal liability, rental losses during repair work, and interior and exterior damage. However, there should be full disclosure of these coverages and other additional coverages.

2. Great Customer Care

When reviewing the different quotes, be on the lookout for customer reviews about the insurance provider. Customers who have a pleasant experience are more likely to leave positive reviews and even refer others.

Also, just by making inquiries, you can deduce the quality of their customer service. Their representatives should demonstrate cordial regard and active listening.

3. Affordable

A good insurance provider should be able to provide competitive pricing for their insurance policies. In some cases, due to optional coverage, you may need the rental property insurance cost calculator.

Whatever the case, be on the lookout for affordable insurance premiums. B2RDirect’s insurance provider offers arguably the most affordable insurance premium you can find anywhere in Florida.

4. Easy Claims Process

There’s no fun in filing an insurance claim for your rental property. It becomes even less fun when you have to call and wait on hold for hours for your insurance provider. One critical feature of a reliable insurance provider is having an easy claims process.

A good insurance provider will allow you to file a claim online or over the phone in minutes. The insurance company will also assign you an adjuster who is highly responsive and settles your claim as soon as possible.

3 Of The Best National Rental Property Insurance Providers

Here are a handful of the best rental property insurance providers that work nationally:

1. Allstate Landlord Insurance

With over 80 years of experience in insurance, Allstate offers a wide array of insurance options. Allstate Landlord Insurance policy typically covers damages from fire, windstorm or hail, falling objects, and water (plumbing). As part of its standard coverages, Allstate landlord insurance offers dwelling protection, other structures protection, rental income protection, and premises medical protection.

There are optional coverages such as vandalism coverage, burglary coverage, building code coverage, flood, septic and rental property under construction coverage.

Every renewal period, which is typically one year, customers of the Allstate Landlords Package Policy receive a policy declaration document. In the document, they can find details about the deductibles for their coverage as well as the optional coverages they purchased during the year.

2. USAA Rental Property Insurance

USAA rental property insurance is one of the best homeowners insurance providers for rental property because of its many coverage options.

The standard coverages included in USAA rental property insurance are:

  • Income replacement – covers a loss of rental income.
  • Personal liability coverage – covers medical and legal fees if anyone sustains an injury or property damage on your rental property.
  • Home-sharing coverage – offers protection if you rent out your home.

Rental property insurance policies do not include flood insurance. However, USAA offers flood insurance through the NFIP.

3. GEICO Landlord Insurance

With close to 90 years of experience in the insurance business, GEICO is one of the oldest insurance companies in the United States.

The GEICO landlord insurance policy covers:

  • Property investment (protection against property damage and damage to property maintenance equipment)
  • Personal protection (rental income loss and liability coverage)

You can purchase additional coverage for vandalism and additional construction expenses. Septic and flood insurance can also be purchased separately. They have some of the best insurance agents and claims can be made online through their app or online.

Which Company Is Best For Landlord Insurance?

Allstate is one of the most popular insurance companies in the country, and it’s easy to see why. They offer quality services at competitive prices, and they have a long history of working with customers.

In addition to being one of the biggest names in insurance, Allstate also offers some of the best coverage for landlords. In fact, if you’re looking for a high-quality standard landlord policy, Allstate may be your best bet.

One factor that sets Allstate apart from other companies is their use of local agents who work directly with customers. This provides a more personal experience than some other companies offer. Your agent will help you choose the right policy for your needs and make sure everything runs smoothly once you’ve signed up.

There are also a variety of other insurance providers that work locally and have a more mom and pop feel. One of these options is B2R Direct. We pride ourselves in offering the highest quality rental property homeowners insurance in the state of Florida.

How To Buy a Rental Property with Free Homeowners Insurance for a Year

So you’ve seen why you need landlord insurance if you’re planning to rent out your property in Florida. The good news is that B2RDirect offers one year of free rental property insurance to anyone that buys any of their new build homes.

Our team has helped thousands of people buy and rent out their homes in the Sunshine State, so we know what it takes to make sure that your landlord experience goes smoothly. And we can help you get started with the right insurance coverage, too. Check out some of our projects!

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