As professional property managers on the Big Island, there’s a lot we do to protect your property while it’s being rented out to tenants. We conduct routine inspections and we do a thorough job of screening tenants. We have preventative maintenance plans in place, and we routinely respond to minor repair issues and unexpected emergencies.
Everything we do protects the condition of your investment and your residents. Having the right insurance in place is also a good way to protect your property and limit the risk and liability that comes with owning residential real estate.
Landlord Insurance vs. Homeowner’s Insurance
The main difference between your landlord insurance policy and the homeowner’s insurance policy you have on the home you live in is that your landlord policy covers the structure of the home and the costs to repair and replace it. However, it doesn’t cover any personal belongings that aren’t yours. When you live in a home, your insurance covers the structure and all your belongings. But, with a landlord policy your home is covered, but not the tenant’s personal items.
This is why we strongly recommend you require renter’s insurance of your tenants. For a minimal cost, your tenants can get a lot of coverage which will protect them in case of loss. If a fire sweeps through the property, your insurance policy will cover the loss. But, your tenant’s electronics, clothing, and furniture will not be covered. Make sure they understand that and insure themselves.
Landlord Insurance and Liability Protection
A good landlord insurance policy will also have higher liability coverage than your average homeowner’s policy. This is important, because anything can happen when tenants are living in your property. Talk to your insurance agent about the required or recommended liability limits for properties in Hawaii. If something happens and you’re sued, you want to be protected.
Loss of Rent Coverage
It’s important to cover yourself in case you have to move your tenant out of the property. Suppose there’s a major storm that tears the roof off your home or the air conditioning dies during a humid summer month and there’s a delay in getting the new system installed. Your tenants will not be able to stay in the home, which means you may have to put them in a hotel. If they can’t live in the property for an extended time, you’ll lose a lot of rental income in addition to paying out of pocket for costs like hotel bills. If your landlord policy doesn’t already include loss of rent coverage, consider adding it.
Additional protections are always available when you’re buying insurance for your rental property, and you should consider them carefully. Flood insurance and bed bug policies are now available. It’s always better to have more insurance instead of not enough.
Take Your Tax Benefits
Like professional property management fees, insurance premiums are tax deductible. We don’t think it’s ever a good idea to be cheap when it comes to insuring one of your most valuable investments. If you don’t have a reliable insurance agent, let us know and we can make some recommendations.
If you have any questions about insurance for your rental property or anything pertaining to property management on the Big Island, please contact us at Hawaiian Dream Properties.