When you first start investing in property, it can feel like everything is expensive. From fees and taxes to insurance premiums, there are hidden costs everywhere. Even so, the cost of landlord insurance isn’t as cheap as you might think. On average, coverage for a small rental property will set you back around $600 a year; slightly more than double what some other similar asset classes tend to cost.
With that being said, some landlords will be fortunate enough to have other assets from which they can offset the cost of insurance. If you fall into this category and are looking for ways to save money on your policy, there are a number of much cheaper alternatives that may suit your needs just as well. Here are the top five cheaper options for landlords’ insurance:
Short-term insurance for your rental property
If you only own a rental property for a couple of years before selling it, you probably won’t need a long-term landlord’s insurance policy.
In this case, a short-term policy will probably suffice. In most cases, a standard commercial property insurance policy will be enough to cover your building while it’s unoccupied.
Short-term policies typically cover the structure, plumbing, and electrical systems of the property; everything except the items inside. Even though short-term policies are much cheaper than long-term policies, they still come with plenty of exclusions.
Make sure to read the fine print before taking out a short-term policy. If anything goes wrong during the short period that the property is unoccupied, you could be out of luck.
Co-ownership insurance for your property
If you own multiple properties with different partners, you may want to consider a co-ownership insurance policy. If one of your partners has a poor track record of paying their bills, it can make it difficult to get landlords insurance for the other properties that you have.
A co-ownership policy ensures that any one partner can’t put your other holdings at risk. The best part about co-ownership insurance is that it can be tailored to suit your needs. You can use a co-ownership policy to cover any number of properties under any given circumstance. If you own a large portfolio of rental properties, this can be a great way to save money on your policy.
Renters insurance to cover your tenants’ belongings
Landlords’ insurance policies will typically cover the structure of your property, but not any items that you leave inside. If something breaks or gets stolen, your policy will not compensate you for the lost items. If you have valuable items in your rental property, it can be a good idea to purchase renters insurance for your tenants.
This will protect any belongings that are inside the property and will reimburse you if something breaks or gets stolen. You can also use renters insurance to cover your tenants in the event of an accident. If a visitor is injured on the property, renters insurance can help to cover the costs associated with their medical treatment.
Named tenant insurance for a single individual
Sometimes, you may want to cover a specific individual in your rental property. Maybe the person is an elderly person who needs a little bit of extra protection. Maybe it’s a person who would like to add a little bit of extra protection to their home while they are away.
In this case, you can purchase named tenant insurance. This type of policy will cover a specific individual in your rental property. It will provide them with the same level of coverage that you receive as the landlord. This can be a great way to save money on your policy if you have a single tenant who doesn’t have many valuable items in the property.
Landlords contents insurance
This is one that we mentioned at the top of the list. This is one that we’re all thinking about and it is insurance that protects your property from the inside out. That’s right, this type of policy will protect you against damage to your belongings and will also provide you with enough coverage to replace your items in the event that they are stolen or damaged beyond repair.
This type of policy is one of the more expensive options for landlord’s insurance for a couple of reasons. First of all, you are going to need a policy that has a very high limit. This is because the belongings in your property will likely be much more expensive than they would be if they were in someone else’s home. Secondly, the deductible that you choose will have a huge impact on the cost of your policy. The higher the deductible, the less you will have to pay for your policy.
For novice investors, landlord insurance may be a very confusing subject. Also, it might be costly. If you can’t afford the normal coverage, there are a few less expensive options available. Short-term insurance, co-ownership insurance, and renters insurance are all excellent possibilities for lowering your costs. But, for the greatest coverage, look for a policy that incorporates a number of these less expensive alternatives.