More often than not insurance is an after-thought for real estate investors and landlords despite being a major part of building successful and noteworthy property investments. Having a good insurance plan backs you up in case you are misfortunate enough to face partial or total property loss and prevent you from experiencing a huge financial loss.
Therefore, finding the right balance between paying your insurance premiums and setting aside enough cash so that you are not burdened is the key to success in this matter. Furthermore, a professional insurance agent can help guide you through the insurance process and give you a good outlook and how you should go about insuring your properties.
What are the types of insurance for real estate investors?
No business is financially risk-free and the real estate business is no exception, so in order to protect yourself from events well out of your control, there are several insurance plans to help you set up protective barriers along the way and help you recover from a financial disaster. Some of the notable insurance types that cover a multitude of possible situations include:
- Hazard and Fire Insurance: It goes without saying that your property is always at a risk from fire damage; therefore, it is a must to have an insurance plan if you wish to protect your property.
- Liability Insurance: Liability insurance is always a must and the general liability coverage protects you from lawsuits threatening you of being responsible for any sort of misfortunate incidents happening on your property where a person is hurt
- Builder’s Risk Insurance: This is for the investors who are in the business of house flipping. Once you purchase a vacant or nearly vacant property, as you renovate it, the likelihood of it being vandalized, facing hazards or having a construction-related accident is very high. Therefore,having an insurance plan that covers that aspect is important. However, it is important to know that, properties which fall into this particular category do not qualify for the hazard and fire insurance policies, as well as the liability policies.
- Loss of Income Insurance: This can be added to the Hazard and Fire Insurance with an additional cost and is mostly applicable to those who rent out their properties to tenants.
The goals of mostreal estate investors are similar; the actual execution of the business plan differs. Hence, for each type of property and real estate investor, insurance policies are designed differently. Therefore, the smartest thing to do would be to talk to a professional insurance agency and have an agent sort the options out for you and be well on your way to protecting your property and yourself.
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