Landlord insurance is one of those non-negotiable expenses of doing business. It’s, at best, a nuisance for many. So, the question on countless minds is: how can I save on landlord insurance? Luckily, it actually is possible to save money. It just requires some creative, yet simple strategies, like paying higher deductibles to reduce your premiums. We’ll walk you through it. Let’s uncover the details below in this handy guide to landlord insurance.
Guide to Landlord Insurance 101
There are many aspects you need to think about when you brainstorm landlord insurance cost reduction. In turn, in order to ponder those questions effectively, you should know the answers to some basic questions. Our property managers in Philadelphia turned to the experts at Forbes for answers, and they provided many insightful answers. Let’s get right to what they have to say.
Landlord Insurance vs. Homeowner’s Insurance
Forbes observed that landlord insurance and homeowner’s insurance are overall similar—with a hitch.
Both types of insurance offer coverage for housing and other structures, as well as liability coverage. However, landlord insurance has a few extra perks. It has loss-of-rent coverage and can provide landlord’s property coverage as an add-on.
On the other hand, Forbes noted, homeowners’ insurance does not include those benefits or other landlord-related ones. Secondly, landlord insurance has a different cost level than homeowners’ insurance. Landlord insurance can be more expensive than homeowners’ insurance.
How Much is Landlord Insurance
Landlord insurance policies cost around a quarter (25%) more than similar homeowners’ policies, according to the Insurance Information Institute. In that vein, the average $350,000-worthy US landlord insurance for one year would cost almost $2,000. This isn’t something to sneeze at, and that’s why you’ll want to look into the discount-finding strategies below.
How Much Landlord Insurance Do I Need
It all really depends on your property’s circumstances. For example, if you live in a high-theft area, you may want to get extra burglary insurance. If your unit is susceptible to floods, you could secure flood insurance. Depending on the qualities and vulnerabilities of your property, you may want to seek extra insurance.
How Can I Save on Landlord Insurance?
Since landlord insurance quotes are summed up from estimated property rebuilding costs, there are several factors you can use to lower your landlord insurance quotes. These factors are widely varied in scope. However, you must remember them all, because each and every one will affect your bottom line.
Factors That Affect How You Can Save on Landlord Insurance
- Property size: The larger your house is, the more you will pay in insurance costs.
- Unit age: If you have a home that is higher in age, your insurance price will come to match.
- Building construction type: Certain construction types, like brick, may be stronger than other types, like wood. In cases where your construction type is strong, you may face fewer fees than someone with a weakly-constructed home.
- Insurance company: Different insurance companies have different rates, so you should compare their quotes.
- Your Location: If your property is in an area with many natural disasters, thefts, or vandalism incidents, your insurance rates may be higher.
- Discounts: Discounts are key to cutting costs. You can earn discounts through simple means, such as having a security system.
- Deductible: Deductibles are the insurance cost subtracted from your insurance claim check. A common rule of thumb is that the higher your deductible fare is, the less your landlord insurance will cost.
Ways You Can Save On Landlord Insurance
No matter the makeup of your property, there are some ways that you may be able to cut costs on landlord insurance costs. While this is an added expense for landlords, it is a necessary one to fully protect yourself, the property, and your rental business. In turn, there are ways to obtain good insurance that doesn’t break the bank. Let’s review a few tips!
Maintain Your Property
Your property’s state will impact how likely it is that you experience property damage or avoidable accidents. Then, that will impact your premium costs. Insurance companies calculate premiums based on your property’s shape, as well as a few other factors. Furthermore, in-shape properties may less frequently require insurance company payouts, which will help you build your reputation with these companies. Once you have solidified a reliable reputation, you can use that to your benefit. This is when you can negotiate your premiums for your properties.
Pay Higher Deductibles to Pay Lower Premiums
Real estate owners can use deductibles to lessen how much they pay in premiums. When landlords do this, they can make sure they have enough coverage, even though they have low per-occurrence limits. By doing this, landlords trade optimal protection for unexpected costs for the predictability of reduced regular insurance fees. This might sound risky, but it works well for some people. For example, if a deductible is $1,000 and a claim is $10,000 in value, the landlord will get a $9,000 payout.
Buy Your Insurance Policies in a Bundle
If you, like many landlords, rent out multiple units, you might benefit from insurance bundles. Insurance bundles are, essentially, volume discounts for having multiple policies with one carrier. However, multiple-property landlords aren’t the only ones who can join in on the fun.
Landlords who have only one property also may be eligible for bundles. If they have multiple policies for multiple coverage areas, they can use this fact to negotiate a better rate than before. Bundles offer landlords reduced prices and the chance to add more extensive coverage to their properties. This is something you don’t want to pass up on.
Make Sure Your Tenants Hold Renter’s Insurance
Landlords can also reduce their costs by ensuring renters are equally liable for property-related financial losses. It would be wise for landlords to require tenants to obtain renter’s insurance, and choose tenants who are reliable and trustworthy. This way, you won’t foot the whole bill for any issues that could arise.
Discuss Discounts with Your Insurance Carrier
Insurance companies may offer various discount bundles for various customer bases. For instance, if you belong to certain organizations or associations, you may be eligible for a special price cut. You also may check the box if you are a loyal customer or are buying policy bundles. Sometimes, you may receive these discounts automatically. Other times, you should proactively negotiate these price reductions.
Get More Property Maintenance Tips with BMG
Yes, it is possible to cut costs on your landlord’s insurance. When you use easy solutions, like the implementation of renter’s insurance, to cover your costs, it enables you to funnel your hard-earned money elsewhere.
We hope these tips were eye-opening for you. These are only a few of the industry insights we can offer at Bay Property Management Group, where we have years of experience living and breathing property management. We have dealt with insurance issues more times than we can count, and we can lend a helping hand in looking for a better deal. Not only that, but we also know how to handle move-in processes, maintenance, rent collection, and more. Contact us today to take all of that property-managing stress off of your list.
