Protecting your personal assets and shielding them from business activities is a smart thing to do. We live in an extremely litigious society when sometimes it seems as if anything is ripe for a lawsuit. That’s where insurance comes in to play as well. Not just for hazards such as fire and wind but liability insurance.

rent loss insurance

Having an annual meeting with your insurance agent should be on your “to do” list each January and if you have a very good insurance agent already it’s likely the agent that reminds you to come in for a chat and review your assets and liabilities.

There are a few basic types of insurance policies and riders real estate investors need to be aware of. The first being protection against basic hazards. Money paid to you to make repairs as a result of a storm, a fire or hail for instance. A blanket liability policy covers you against legal claims made as a result of injury or harm that occurred on your properties. If the structure is labeled as being in a flood zone, flood insurance is a requirement.

You may also want a rider on your hazard policy called “rent loss” insurance. This addition is sometimes hard to find but when needed it keeps your cash flow intact. Rent loss doesn’t mean the landlord is paid while the property is vacant due to a tenant moving out or perhaps waiting on a new tenant to move in. instead, rent-loss coverage pays the landlord an amount equal to rent when repairs are being made to the property as a result of a fire or other hazard when the unit is uninhabitable. If a fire damaged the property to the point the tenants have to temporarily move, rent-loss coverage pays the rental amount directly to you until the property is ready for your tenants to move back in.