Property insurance for investors is designed to cover the structure and permanent fixtures therein such as bathtubs, drainage systems, wall-to-wall carpets, cabinets and any other installments in the building.
This ensures that as an investor, you do not lose your money when a risk such as theft, natural disaster or an accidental fire occurs. There are several insurance companies offering policies of this kind, with each have been varying terms. It is important to compare them so that you get one that will cover your property to the maximum. However, all of them have something in common; they have a list of things they cover and those which they do not. Understanding such clauses will enable you to make an informed choice and maybe get an extra cover for the uncovered items.
What the property insurance for investors cover
In most cases, a standard insurance will cover the entire building and its permanent fixtures, excluding the belongings brought in by the tenants. In general terms, the floor, walls and the roof will be covered, including the outdoor living extensions such as the patio or the deck. The property is protected from the named and open perils. However, for compensation to be offered, the risks must be outlined in the policy document. That is why property investors should be on the lookout for the risks that the insurance cover will pay for.
Here are some of the risks which are covered:
• Theft
• Fire
• Lighting
• Wind damage
• Malicious damage or vandalism
• Damage caused by utility line installations
In the event of a loss, due to the above risks, the company may employ any of the three types of insurance coverage. First, they may apply the replacement cost coverage, which pays the expenses of reinstating your property, notwithstanding appreciation or depreciation. Premiums for this coverage are determined on the basis of replacement cost values rather than on actual cash value. On the other hand, actual cash value coverage offers replacement cost but subtracts depreciation. The third type of coverage is the extended replacement cost. It considers inflation fluctuations and pays the exact amount at that point in time. As a property investor, note that when you get property insurance, the coverage limit outlined on the policy document is the maximum amount that the insurer will pay if damage occurs on your investment.
The property insurance has some exclusions too including:
• Any damage that is caused by the perils covered in the policy document such as war, nuclear activity, and unexpected environmental damages.
• All structures and contents, which are not attached to the main property or do not belong to the property investor. Although some property insurance policies will cover outdoor items such as equipments. You will have to secure a different cover for any other additional items, such as cars, trucks and the like.
• Fences, signs and notice boards, are not also covered in the policy
• Trees, lawns, shrubs and land, will also need a separate cover
All property insurance policies are not similar, but most standard ones will cover the above items and have the listed exclusions. However, it is important to shop around to get a cover that takes into account most of your belongings in your property, commonly known as the umbrella cover. This will enable you to save money on the insurance expenses and get the most out of the investment.
It is important to read and understand the policy document, very well, to know what is covered and what is not.
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