As a landlord, you need insurance to protect yourself from financial losses you may incur due to damages caused by fire, theft, or natural disasters. When this happens, you’ll need to look for local services: not only should your condo insurance in New Jersey recover some of the costs of damaged or stolen property, it should also help you recover lost income if the property becomes uninhabitable and cover expenses for frivolous lawsuits you might encounter. Before you purchase a policy for your condo units, there are a few questions you need to ask.
What coverage do I need?
All policies are not created equal, so it’s necessary for your agent to go over the various coverages with you. Most landlord policies cover the same basics but may have different add-ons you should consider. Basic coverage includes property damage, liability, and loss of income. In case your property becomes damaged due to a natural disaster, act of vandalism, or fire, your policy covers some of the cost to repair or replace materials. These policies usually do not include tenants’ personal property.
Condo insurance is also designed to protect you against lawsuits. If a tenant or a guest injures him or herself on your property, you could be subject to a lawsuit. But there are also many other reasons a tenant might sue a landlord. For example, sometimes a tenant fights you for a security deposit they feel you unrightfully kept. Or they might decide you have not made the proper repairs on their units. Screening your applicants with a tenant credit check before you rent them a unit will help weed out most problem tenants, but having a good insurance policy in place will protect you just in case you need it.
A good landlord’s policy will also cover loss of income. In other words, if your property becomes uninhabitable due to an accident, the policy will help recover some of the income you lose while you are not able to collect rent. Additional coverages might include things like employer liability, flood, landlord contents, or rent guarantee.
What are the limits of condo insurance?
Landlord insurance, just like any other insurance, has its limits, and you need to go over yours thoroughly with your agent to make sure you have the coverage you need. For example, some policies cover damage caused by tenants, while others do not. As far as liability goes, most policies cover any lawsuits that tenants or visitors might file. For example, say a tenant or visitor slips on the walkway outside the condo and they file a lawsuit. Your policy will only cover their medical costs if the courts find that your negligence caused the fall, such as if you failed to fix a loose step.
Another limit is the property damage these policies cover. As previously stated, most landlord policies do not cover tenant possessions such as furniture or other personal belongings. Tenants should be encouraged to purchase renters insurance policies for these circumstances.
How much is condo insurance?
The cost of landlords insurance for any rental unit varies greatly based on several factors. The rental property’s size and cost directly impacts the cost of the policy, as do the number of rental units available, geographic location, age of the property, whether you allow smoking and pets on the premises, whether you have smoke and burglar alarms, and how often you have inspections. It also depends a lot on the type of policy you purchase and how high your deductible is. It’s advisable to get the policy with the lowest deductible you can afford and keep that amount in a savings account for emergencies.
Condo insurance is not usually required by law, but it’s unwise to rent property without it. In the event of a catastrophe or major lawsuit, you could wind up bankrupt without any type of coverage. Protecting yourself from financial loss will help give you peace of mind and a more secure income strategy.
