Property investment can be a lucrative business. In fact, its reputation as a great way to build wealth has given many people the impression that it’s an “easy” way to get rich quick, with minimal risk or cost to the investor. This couldn’t be further from the truth, though, and many new investors have learned the hard way that there are plenty of expenses that chip away at their profit each month, insurance coverage being one of them.
While it’s usually not difficult to secure coverage for your investment property, it often comes at a price – and one that can significantly impact your cash flow if you’re not careful. This is why it’s helpful for investors to arm themselves with a few tips that can help them save a little bit of cash on their insurance policy, because let’s be honest here, every little bit counts!
Tip #1 – Find a reputable, trustworthy agent.
Far too many investors make snap decisions and jump into an agreement with Joe Blow the Insurance Agent, who – shocker! – doesn’t have the investor’s best interests in mind. Just because they have the lowest premiums or what appears to be the best coverage, doesn’t mean it’s the best choice for you. Before settling with an agent, take the time to ensure that they have a solid reputation (i.e., get some referrals from other investors) and are familiar working with investment properties. Once you’ve decided on someone, plan to review your coverage every now and then and make sure no adjustments need to be made. This little bit of homework can wind up saving you big time if the day ever comes that you need to actually use the policy.
Tip #2 – High deductibles aren’t necessarily a bad thing.
Don’t let a high deductible scare you off from an otherwise great coverage! This should not be a deal breaker.
Higher deductibles usually mean lower premiums, and lower premiums mean more money in your pocket each month.
Tip #3 – Add liability insurance to your package.
You will also need to cover the exposure created by your tenants – which will, in effect, cover YOU. Surely you’ve heard stories about a clumsy tenant falling down the stairs and blaming it on the landlord somehow, and then that landlord having to shell out the cash for medical bills, missed work, undue stress/trauma, etc. Whatever the case, you do not want to be in this situation, which is why you need to protect yourself with liability insurance. In the event something does happen to one of your tenants, this type of insurance will be your saving grace.