What to Look For in a Landlord and Rental Home Insurance Policy
For the most security, here are some things to take into consideration when choosing coverage for your rental property.

Not all insurance policies are the same
In spite of what many people think, not all insurance policies are the same. Coverages and methods of settling your claims can be drastically different from one insurance policy to another. Purchasing insurance based only on price may save you a few dollars up front, but cost much more at claim time.

Know what your policy covers
Determine what you want your policy to do for you in the event of a claim. Landlords who want minimal coverage to protect their property from major causes of loss, such as fire, wind or explosion, should consider a named peril policy. A named peril policy actually names the types of losses that will be covered in the policy.

For landlords who want the broadest coverage available, a comprehensive policy is the answer. A comprehensive policy covers all types of accidental losses, except those that are specifically excluded in your policy.

Besides the base coverage within your policy, you will need to decide what optional coverages to include. These can include but are not limited to: liability, loss of rents, other structures, theft, personal property, earthquake, and vandalism and malicious mischief (sometimes included in the policy).

Know your loss settlement method
There are two common methods of loss settlement. Actual Cash Value settlement pays only for the current value of your property, which is the cost of replacement minus depreciation based on age and wear, up to the limit in the policy. Replacement Cost settlement pays you the amount needed to replace your property, without deduction for depreciation, with new property of like kind and quality, subject to any applicable deductibles and coverage limits. (Note: With Replacement Cost, you must actually replace the property to be awarded a replacement cost settlement. If you do not, or until you do, your claim payment would be based on an actual cash value basis.)

A policy with Actual Cash Value settlement, as you might expect, will have a lower premium. In the event of a claim, however, the difference between the two can add up to thousands of dollars. The choice is yours . are you willing to pay more insurance premium, knowing that if you don't you would receive the actual cash value of your home if it were totally damaged?

And be aware that in the event of a partial loss, there may be a depreciation charge applied to your settlement.

There are additional ways to reduce your premium
Besides some of the options we have already talked about that can save you money - named peril vs. comprehensive and Actual Cash Value vs. Replacement Cost - there are other ways to help reduce your premium. Check out the deductible options that the insurance company offers. Some companies offer generous discounts for a higher deductible.

Check to see if your insurance company offers other discounts, such as discounts for masonry construction.

It's a good idea to review your policy every year
Review your policy each year to make sure it is still providing you with the coverage you want. Values of properties can fluctuate each year due to your improvements or housing market conditions. Make sure your coverage amounts are still adequate for your property.

Foremost. The landlord and rental property insurance specialist.™