For the right person in a suitable situation, rental property is an excellent investment. However, unlike most traditional options, you must keep plowing back your profits to safeguard your investment.
In addition, landlords face multiple risks.
For instance, rental properties require periodic maintenance. If the roof starts leaking, fixing it requires your time and money. Similarly, if a tenant is injured because of poor maintenance, they can sue you to cover the damages related to the injury.
Fortunately, landlords can shield themselves from unexpected losses using commercial umbrella insurance for rental properties. Consider buying a commercial umbrella insurance policy from a
trusted insurance agency in Northridge, CA.
What Is Commercial Umbrella Insurance for Rental Properties?
Commercial umbrella insurance is a type of coverage that supports standard liability policies like rental property coverage. It offers much more extensive protection with an extended policy limit.
Commercial umbrella coverage primarily aims to safeguard your assets against accidents and unforeseen circumstances where you’re held accountable for personal injury. The cover protects the landlord against owner liability and injuries tenants, guests, or vendors may sustain on the property.
A landlord must have one or more underlying liability cover to obtain
commercial umbrella insurance for rental properties.
For example, the liability insurance policy covers the initial claim if a vendor gets injured in a rental property and makes a claim. However, if the payout exceeds the policy limit, the umbrella insurance for rental property covers the rest.
Benefits of Commercial Umbrella Insurance for Rental Properties
It Complements Landlord Insurance
Buying landlord liability insurance doesn’t rule out the need for commercial umbrella insurance. Although this coverage protects property owners, it still has weak points for which commercial umbrella insurance can compensate.
Most landlords acquire landlord insurance without question because it covers them against property damage or liability claims. Unfortunately, landlord liability insurance has a limit of $500,000 to $1,000,000, which is enough for most single property owners.
However, some claims can surpass the limit of a
landlord’s liability policy. In a fire incident, it is possible to encounter a claim of up to $ 10 million. Unfortunately, it might be beyond the landlord liability limit, highlighting the need for commercial umbrella insurance.
It Is Convenient for Landlords and Property Managers
Commercial umbrella insurance is a convenient plan because it can provide coverage for multiple properties. A single cover can protect the entire investment if properties are spread in different states.
Similarly, if your client owns properties in different areas, you can buy a single cover to protect the entire investment.
Protection From Unforeseen Events
With commercial umbrella insurance for rental properties, you may have protection from events not covered by your underlying policies, including:
- Personal Injury
- Property Damage
- Discrimination
- Employee benefit liability
- Advertising Injury
- Contractual liability
- Wrongful eviction
Dependable Coverage
Commercial umbrella insurance provides coverage that can kick in when your primary insurance packages have been exhausted. It, therefore, ensures you and your rental properties are protected when you need it most.
Long-term Savings
It may cost you more to enjoy the added protection of commercial umbrella insurance. Even so, umbrella insurance is a cost-effective solution for property owners compared to the cost of facing a lawsuit or liability claim.
What Does the Commercial Umbrella Insurance for Rental Properties Cover?
The umbrella insurance becomes active when the primary coverage limit runs out. Commercial umbrella insurance can also cover multiple properties situated in different states.
Typically, the umbrella insurance offers the following coverage:
Legal Liability
A landlord can be legally liable for tenant, guest, or vendor injuries at the rental property. In addition, if a tenant becomes
ill due to exposure to mold and other poor living conditions, they could be held legally liable.
Commercial umbrella insurance can cater to the legal fees, court fees, and settlements arising from the lawsuit or liability claim.
Medical Expenses
If a tenant or a guest becomes injured on the property, the commercial umbrella coverage can provide additional protection if your standard policy proves insufficient. It can cover medical care-related costs, including medication, physical therapy, hospitalization, surgical expenses, and continued care.
Damaged Property of the Tenant
If a former tenant breaks in and steals or damages property, the commercial umbrella coverage provides additional protection for the damaged items. Similarly, tenants enjoy additional coverage for lost or damaged items in case of fire or flooding damage.
What Is Not Covered By Commercial Umbrella for Rental Properties?
Each insurance cover has exclusions; similarly, the commercial umbrella for rental properties doesn’t cover:
- Damages to the rental property
- Rental properties owned under LLC are excluded
- Personal injuries or expenses sustained by the landlord
- Damages that the landlord intentionally caused
What to Consider When Buying Commercial Umbrella Insurance for Rental Properties?
When selecting your coverage limits, there are three essential items you should consider:
- Potential Risks: Take a risk assessment of your building and tenants. For instance, if the building is in an area prone to wildfires, you may need higher coverage. Similarly, if most of your tenants are households with children, the risk of an injury claim is higher, and so should your coverage limits.
- The Value of Your Property: The liability risk is lower if you have a single rental property. However, you need a higher umbrella limit if you own multi-condos, apartment blocks, and several single-family units.
- Loss of Revenue: A single liability claim could mean loss of future income for uninsured landlords. Landlords with multiple assets understand the magnitude of loss when required to pay several liability claims. So, if you plan to build an additional property, commercial umbrella insurance can protect you from unforeseen losses.
Protect Your Investment With Commercial Umbrella Insurance
If you’re sued and slapped with a settlement demand, you may be forced to use rental income to pay the bill. While some settlements are minimal, most are substantial and are likely to disrupt your finances.
Consider buying commercial insurance for rental properties from a reputable firm like Panorama Insurance Agency to minimize losses.
Contact us online or call us at 816.658.2867 to get a free quote.
