Insurance for rental property: what investors should cover
An overview of building, contents and liability insurance for rented apartments or houses, including underinsurance risk.
A rental property is an income-producing asset with risks: damage, rental interruption and liability. Insurance should protect not only walls, but also the investor cash flow.
Building versus contents
The NBS distinguishes building insurance from contents insurance. Building insurance covers the structure and fixed parts, while contents insurance covers equipment, furniture and movable items.
In a rental, it is important to know which equipment belongs to the landlord and which belongs to the tenant. Otherwise there may be a gap in cover.
Underinsurance and insured amount
If the insured amount does not match the real rebuilding or replacement value, the insurer may reduce the payout. With an older policy, the premium alone is not the key number.
Investors should review the insured amount regularly, especially after renovation, construction cost growth or furnishing changes.
What to check for rentals
For rental properties, check cover for water damage, fire, vandalism, liability and assistance. The lease should also require the tenant to report damage promptly.
- building and fixed-part insurance,
- contents owned by the landlord,
- liability toward third parties,
- limits and exclusions related to rental use,
- policy amount and anniversary tracked in the portfolio.
Sources
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