With the upturn in the housing market, more people are getting back into the investment property game. Owners of habitational property with less than five units – single family homes, duplexes, or small apartment buildings – should consider a dwelling insurance policy to protect their real estate investments.
Dwelling insurance covers the physical structure of a home, but not the contents of the property. The coverage protects against losses due to certain named perils like lightning, fire, water, wind, hail, sinkholes, or vandalism. If the property is damaged or destroyed, the policy would cover repair or replacement of the home. Since dwelling insurance does not cover a home’s contents, it is typically purchased by property owners who rent or lease out the property. Therefore, renters are advised to secure their own renters insurance to protect their personal belongings in the home.
Property owners can elect to add coverage for other perils, such as burglary or theft of something that is part of structure of the home and not the contents itself. Common items covered in such instances are air conditioning units, porches attached to the home, or appliances like washers and dryers in attached carports or utility rooms. For even more coverage, property owners may want to add coverage for items that are not part of the structure of the home, such as pools, fences, sheds, and detached garages.
Most dwelling property insurance polices from reputable carriers also provide a certain level of liability coverage, which protects the property owner against lawsuits that could easily cost several thousands in legal fees and medical expenses. The two most common personal injury claims filed against dwelling insurance polices are ‘slip and fall’, dog bites and other dog-related injuries. While dog bite claims decreased in 2014, the average cost per claim increased (Insurance Information Institute, 2015).
As dwelling property insurance is best suited for property owners who rent out the units, loss of use coverage is a popular coverage often added to policies. If the property becomes uninhabitable due to an insured peril, such as fire damage, the loss of use coverage could reimburse the property owner for the loss of rent during this time. perils are covered under most dwelling property policies, flood or earthquake damages are almost always excluded coverages. Property owners should investigate additional flood or earthquake coverage best suited for their region.
Several carriers offer dwelling property policies, but insurance agents can find the right product for property owners through partnering with wholesale brokers. Atlantic Specialty Lines has access to several products from top rated carriers that are ideal for property owners with one to four units as well as other personal, commercial, and professional lines products for individuals and businesses.
Insurance Information Institute. (2015). Dog bite liability. Retrieved from http://www.iii.org/issue-update/dog-bite-liability.