Real estate insurance is a topic that is vital to any successful real estate investment, yet it’s a topic that many property owners often overlook until it’s too late. In the event of a loss, whether it’s a partial or a complete loss, if your property isn’t insured properly, your business could be financially devastated. Making certain that you have the right type and sufficient amount of insurance allows you to protect against potential losses. Part of making sure that you have the right insurance is understanding the various categories of real estate insurance.
Flood Insurance Property
This type of insurance is typically only necessary if your property is located in a designated flood zone. With that said, it can also be a good idea to obtain flood insurance even if your property isn’t located in a designated flood zone, but has a tendency to flood. Keep in mind that if there is a significant storm, such as a hurricane, in your area, and your property floods, your regular insurance policy may not cover the resulting loss. Too many property owners have learned this lesson the hard way. Further, your regular policy may not cover the damage if the pipes break or there is some other type of leak in your building. Without having specific flood insurance, you could find yourself out of luck in covering your losses.
Builders Risk Insurance
This category of insurance is only necessary you’re renovating the property. Properties in this category usually won’t qualify for a typical hazard and fire insurance policy due to the increased risk for property damage, vandalism, or slips and falls. You should be prepared for the fact that you’ll probably pay more for this type of policy, but given the risks, it can be worth the peace of mind.
Hazard and Fire Insurance
Regardless of whether your property is new, old, or somewhere in between, this type of insurance coverage is always necessary to protect against losses arising from fire and other hazards. Without a crystal ball, you simply never know what kind of damage could befall your property. Hazard and fire insurance gives you the coverage the need.
Finally, it’s important to consider liability insurance. What happens if someone is injured on your property? Liability insurance makes certain that you’re covered against any injuries that may be sustained by third parties on your property. If you’re sued, it will also cover the cost of your defense and resolving the lawsuit.