As a real estate investor, you are exposed to many different types of risk. These risks come in two main categories: property damage and personal liability. Property damage occurs accidentally and maliciously, if not from people then from natural disasters. As the owner of the property, you are held responsible for all safety concerns. This means you are at risk from a wide range of lawsuits. Often, it is a legal requirement to have the following insurance plans. Even if it’s not required in your area, it is still wise to consider having these types of coverages if you wish to share the risk of being a real estate investor.
Liability Insurance
This offers financial protection when the investor is sued over injuries that occur on the property. It covers legal costs and payouts.
Loss of Income
This insurance is for landlords. It protects you during times of rental property vacancies.
Flood Insurance
Just in case your property gets too wet! Flood insurance is a requirement if the property is in a designated flood zone. It is important to note – it covers damage from broken water pipes – an item often looked over.
Builder’s Risk Insurance
If you purchase vacant property for renovation this insurance protects the property during the construction period. It covers property damage from vandalism and injury of construction workers. It is two to four times more expensive than normal hazard or fire insurance.
General Contractors Insurance
If you wish to pull your own permits for renovation then you will need to become a licensed general contractor. In order to get your license, many states will require that you have this insurance.
Workers Compensation
If you have employees, this insurance offers them wage replacement and medical benefits in case of injury. There is also a benefit for you: in exchange for the coverage the employee agrees not to sue the employer for losses.
This list covers the main categories of insurance for real estate investors. However, it does not exhaust all the possibilities. For more detailed information, contact one of our agents who specialize in insurance for commercial real estate investors.
