Owning a rental property in Philadelphia can be an excellent investment, but like any investment, rentals come with a variety of risks and liabilities. From natural disasters to theft to tenant-related issues, unexpected events can happen at any time, potentially impacting your financial stability and property value.
To protect your investment, having a solid insurance plan is crucial. You’ll benefit from a relationship with a good insurance agent, and if you don’t have one – we’re happy to make an introduction.
Rental property insurance, also known as landlord insurance, is specifically designed for properties that are rented out to tenants. Unlike standard homeowners insurance, it covers risks specifically related to having tenants, including liability claims and property damage caused by tenants or their guests.
Let’s explore the essential insurance considerations every rental property owner in Philadelphia should keep in mind. Remember that we’re providing this information not as insurance experts, but as Philadelphia property management professionals.
Philadelphia Landlord Policies
Before you approve a tenant or even begin marketing your rental home, you’ll need the right insurance policy in place. A tenant can get injured during a showing. Have the insurance in place, first.
If you are renting out a home that you have lived in previously, you may still have a homeowner insurance policy, and that’s not going to cover you when you’re renting out the property to tenants. Your homeowner policy only serves you when you’re occupying the home. Make the switch to a landlord policy, which is basically the same, but will have some key provisions that are not found in a homeowner policy.
A landlord policy protects your dwelling against any physical damages to the structure or systems of the home caused by fire, lightning, wind, hail, ice, or other covered perils. It also covers your own personal property that’s in the home, such as appliances.
Your landlord insurance offers extra liability coverage as well. If your tenant slips on some ice or a guest falls down the stairs, you’ll be covered for legal fees and health care bills if a lawsuit is brought against you. If there’s a claim that you didn’t adequately maintain the deck or provide handrails to the basement, and an injury ensued, the liability coverage will defend you.
The major difference between the landlord policy and your homeowner policy is that the landlord policy does not cover the contents of the property. If a leak destroys your floors, the policy will pay to replace or repair the floors, but not the tenant’s television that was damaged.
Look for Loss of Rent Coverage in any Insurance Policy
Smart landlords also protect themselves against loss of rent. You count on the rent you earn to pay for a lot of the expenses associated with your property. So, you want to make sure you’re covering yourself in case you have to move your tenant out of the property.
We have seen situations where there’s an unexpected snow and ice storm that collapses a roof and freezes pipes. Or, maybe a sewer line will rupture, causing extensive damage that leaves the home uninhabitable for a few days. There could be a delay in getting the repairs and remediation work complete. Your tenants will not be able to stay in the home, which means you may have to pay to put them in a hotel or make peace with the fact that they won’t be paying rent for a home they cannot occupy.
If they can’t live in the property for an extended time, you’ll lose a lot of rental income in addition to paying out of pocket for costs like hotel bills. If your landlord policy doesn’t already include loss of rent coverage, consider adding it. This is protection you need, especially if there’s damage to the property while tenants are living in it.
Additional protections are always available when you’re buying insurance for your rental property, and you should consider them carefully. For example, you might want to buy insurance that covers floods or construction defects. It really depends on your property.
Require Renter’s Insurance for Philadelphia Tenants
Remember: your tenant’s possessions are not covered by your policy.
The lack of coverage for your tenant’s possessions means that a renter’s insurance policy is an excellent thing to require. Write this requirement into your lease agreement for your tenant’s protection. These policies are usually very inexpensive and can often be bundled into their auto insurance for no more than $15 or $20 a month.
A renter’s insurance policy will also protect your tenants from any liability that may result in damage to the property from unintentional acts. If they start a kitchen fire or destroy your floors when a bath tub overflows, their insurance policy will pay for that damage.
Insurance is the first step in protecting your property from damage that can occur due to a tenant’s actions or from general disasters. You don’t want to be under-insured.
Philadelphia Property Management and Insurance
One of the best ways to reduce the risk of property damage is to work with a professional Philadelphia property management company. Risk management is only one of the services we provide when we’re leasing, managing, and maintaining your property. We’ll ensure the condition of your home is maintained and its value preserved.
There’s better protection when you work with professionals because we handle:
- Detailed tenant screening that ensures only safe, responsible residents are placed.
- Documented move-in and move-out property inspections.
- Preventative maintenance provided by our experienced in-house maintenance team.
- Security deposit management.
- Service-oriented tenant relationships.
We have our own insurance. But, when you add us as an additional insured to your policy, we can handle the logistics around your insurance and provide a unified defense if there are any lawsuits or claims.
Additional questions around insurance for your investment property? Contact us at TCS Management.
TCS Management is a full service property management company headquartered in Philadelphia, Pennsylvania, also serving Cherry Hill, NJ, Wilmington, Delaware, Nashville, Tennessee and the Atlanta, GA and Charleston, SC metro areas. We focus on single-family and multifamily residential property management of homes, condos, townhomes, and apartment buildings.
