Real estate investing can be financially rewarding, especially as you increase your investments and diversify the different types of properties available. However, you do need to protect the investments made on the properties themselves and your financial investments in the event of an unexpected tragedy or situation at one of these properties. Below are the different types of insurance that you can arm yourself with as a real estate investor so that all your hard work is not lost all at once.
Related Blog: A Beginner's Guide to Real Estate Investing
Property Insurance
As a real estate investor, having property insurance on each property purchased is vital. This includes both residential and commercial properties that you may own. Because the properties will vary in age and design, policies will vary in coverage type and costs. You need policies covering accidental tragedies like fire, and purposeful acts like theft or vandalism. This policy will cover the costs of damage done to the structure or the value of the structure if it is a total loss. Be sure to understand whether your policy has Replacement Cost Value coverage or Actual Cash Value coverage.
Builder's Risk Coverage
Any properties undergoing new construction or renovations should have builder's risk coverage protection attached. This protects the investor's financial interests in the property should there be certain issues with the contractor for the duration of the build, as well as materials and equipment onsite during a loss.
General Liability Insurance
Real estate investors should have some form of general liability insurance. While mortgage lenders will require it, properties that are owned outright still benefit from this protection. Should someone get hurt on your property, general liability will help cover the financial costs of medical expenses and property damage that the other party suffered.
Commercial Liability Coverage
If a real estate investor has commercial properties as a part of their investment portfolio, then commercial liability coverage should be attached to those properties. These properties will have employees working and public patrons visiting the location, increasing liability risk.
Umbrella Insurance
While it is not required, umbrella insurance is always an option. Protection with umbrella insurance may be valuable for real estate investors to protect themselves since they can use this as a secondary liability insurance coverage. When crafting your umbrella insurance policy, you want to make sure you have enough coverage for the overall value of your assets to protect your investments.
Flood Insurance
Depending on the property's location, flood insurance could be a requirement as a supplement to the property insurance policy. Areas known to flood and have a high risk will often require this insurance to cover any situation with water damage. This can be related to flash flooding, standing water in the area, or other natural disasters where a large amount of water is relocated to the area.
Remember that flood insurance is still an option for properties that may not be in a flood zone and do not require this policy. As a real estate investor, it is best to err on the side of caution. Adding flood insurance to your property insurance can give you financial protection in unexpected situations.
Is Real Estate Investing Right For You?
At SkyBeam Capital, we understand the importance of investing in real estate and provide our clients with the knowledge and resources they need to make informed decisions. Our team of experienced professionals can help you find the right opportunity and guide you through the entire process. So, if you're ready to take the plunge and get into real estate investing, let us help you make it a reality. Contact us today to get started.
