Rental Properties Insurance
Rental property insurance closely resembles business insurance. A correctly issued policy will provide not only building and liability, but also loss of income coverage.
When insuring a rental property for our clients, we first determine if they want to simply protect their investment in the property or if they would want to rebuild a similar building in the event of a loss. There are actually three different types of claim settlement provisions for rental dwelling policies. They are listed below in order from best settlement to the least favorable settlement.
Replacement Cost Policies. The limit of insurance is equal to the replacement cost estimated by the agent. All losses are settled without depreciation, using new materials of the same quality as the old to replace the damaged materials.
Functional Replacement Cost. The limit of insurance is equal to the cost to rebuild a structure that would serve as a functional replacement. This policy is used when the current building in use would not be rebuilt as is. An example is a 3 story century home occupied as a duplex might be replaced with a modern one-story ranch duplex. All partial losses are settled with new materials, but the materials are not of the same quality as those they are replacing. An example might be replacing plastered walls with drywall.
Actual Cash Value. The limit of insurance is equal to the replacement cost we discussed earlier, less the cost of depreciation. Depreciation increases with age, and can diminish the value of a building up 55%
Common coverage problems we find:
- Insured’s think they have replacement cost but have actual cash value.
- Loss of Rents coverage is inadequate or non-existent.
- Outbuildings/garages are not insured adequately or not insured at all.
- Personal Injury Liability not included.
Call us for a proposal today. It only takes 5-10 minutes to complete a questionnaire and review your individual situation. Ultimately we will visit your property to gather the information we need to perform our replacement cost estimate.
We want you to make an informed buying decision. It is our goal to ensure that you have a clear understanding of the way any claim with one of our insurance companies would be settled.
The Bowers Group…Real Solutions for the Real World.