The basic goal behind buying insurance is to make you financially whole following a loss. You agree to pay a (relatively) small fee to an insurance company today, causing a small but certain loss to you now, in exchange for a guarantee from the insurance company that it will bear the burden of a large but uncertain loss in the future.<\/p>\n
Let’s say that you have a house that you own, free and clear – with no insurance. As long as you continue to pay your property taxes, you have every right to enjoy the use of that house for as long as you like, as guaranteed by law. You may live there, rent it out, leave it vacant or even sell it if you like. However, if that giant tree in the back yard falls on your house causing severe damage, it is still up to you to cover the cost to repair the house. This is the basic reason to carry property insurance, which would have paid for your property to be fixed or replaced.<\/p>\n
Protecting Your Investment:<\/p>\n
Ensuring that you are insured against fire, flood, theft and damage is savvy. It means that you are a covered for large payouts that are incredibly costly. This means that your savings will remain intact in the event of these events happening. As a landlord, your property is your livelihood. It is imperative that you protect your investment as you are ultimately protecting your profit margins.<\/p>\n
As a result, you need to ensure that your profits remain intact. Frequent rentals and short term tenants will cause a lot of wear and tear on your property. Dealing with damage on your property could result in a loss of revenue. Of course, by taking out an adequate insurance policy, you are protecting your coffers.<\/p>\n
Liability Coverage<\/p>\n
In addition to covering the value of your home or other property, many insurance policies also include an important provision for liability coverage. You may not think this is very important, being the careful person that you are, however, there are scores of eager lawyers in every city searching high and low for lawsuits against people such as yourself. Liability coverage is well known to owners of automobiles, but may be lesser-known to homeowners.<\/p>\n
If your neighbor’s house catches fire because you left your charcoal grill unattended, who do you think will pay for the damage caused by the fire? You will. You have paid the insurance company your premiums so that they will pay for larger claims when they do occur. The same goes for someone who is hurt and requires medical attention while on your property.<\/p>\n
Final Thoughts<\/p>\n
One last warning: some insurance companies provide seemingly unbelievable rates for their policies. If the company is unknown and its rates are exceptionally good, this should be a red flag for you. Check around for the company’s reputation, and don’t just take the salesman’s word for it. Have a look at the policy and see what they cover, and what they don’t. You may find only too late that what you thought was adequate coverage, was barely the legal minimum in your area. Seek quality coverage – remember, “cheap insurance can be very expensive.”<\/p>\n
*Investopedia, yourmoneyrelationship,<\/p>\n","protected":false},"excerpt":{"rendered":"
The basic goal behind buying insurance is to make you financially whole following a loss. You agree to pay a (relatively) small fee to an insurance company today, causing a small but certain loss to you now, in exchange for a guarantee from the insurance company that it will bear the burden of a large …<\/p>\n