Insurance

This is a general information reference regarding your rental property insurance. Clients often have questions about insurance. We are not making specific recommendations, only giving some general information. Please contact your insurance agent for specifics regarding your policy and coverage.

For the home you own and live in you probably have a Homeowner’s Insurance Policy. That policy generally covers the structure, personal property and general liability. For rental properties you probably have a Landlord’s Policy or Rental Dwelling Policy. The main differences are: 1) In a Landlord’s Policy you will probably have little or no personal property coverage because you have little or no personal property there. Perhaps only appliances and things of that nature. The tenant will need to insure his own personal property. 2) Homeowner’s Policies also often offer extended structure coverage to 150% of value. Landlord’s Policies may not. So, structure coverage may be different. You should check your coverage. 3) Landlord’s Policies often cover rent loss if there has been structure damage.

Structure coverage amounts will, of course, be at least as much as any mortgage on the property, as required by the lender. You may want to exceed the mortgage amount of coverage if the value exceeds it, or perhaps you no longer have a mortgage. Your insurance agent can help you determine replacement costs and the related amount of coverage you need. Again, please check with your agent.

Liability coverage generally ranges from $100,000 to $1,000,000. The difference in the annual premium to go to the higher limits may be minimal. For a rental property, higher coverage amounts of $500,000 or more may be warranted. Another option to increase coverage, especially if you own several properties, may be an umbrella policy that covers everything you have insured, including all properties. Talk to your agent to see what is best for you.

Earthquake insurance is another option. The cost varies with the property location in relation to earthquake fault lines, and, of course, with the property value. The deductible is usually high, 10% to 15% of the structure coverage, and the premiums are high, often as much or more as your regular total premium.

Will claims increase your premium? Generally, the answer is yes there will be a certain percentage increase.

We ask that you add Cornerstone Property Management as an additional insured on your policy.  For most policies it is automatic.  It should make no difference in your premium amount.

We hope this information is of value to you. Our reference source was Sandra Ornelas with Allstate in Walnut. She said to feel free and call her if you have additional questions. Her number is 909/468-1495. No obligation. Please contact her or your own agent for specific recommendations.