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Real estate investments offer plenty of benefits. They allow investors to build their wealth and provide homes for those who choose not to pursue homeownership on their own. When it comes to rental and investment property, too many owners fail to understand the need for protection in the form of dwelling property insurance in Colorado Springs.

What Is Dwelling Property Insurance?

Insurance plays a critical role in modern society. It provides the necessary protection against loss for automobiles, health, property, and life. Insurance may provide a small amount of money for children or other beneficiaries at the time of death. However, dwelling property insurance is a bit different, and many people are unfamiliar with the name.

Dwelling property insurance is a specially designed product that covers the structure of a property only – it does not protect the surrounding property, nor does it protect the contents of the structure. This sets it apart from conventional homeowner’s insurance, which covers the contents of a home and sometimes covers other structures on the same property.

Why Is Dwelling Property Insurance Important?

This type of insurance is important for safeguarding real estate investors’ assets. This is why it is also known as landlord protection insurance. Colorado Springs property investors require this protection to safeguard against damage from a wide range of “named perils,” including fire and storm damage.

Won’t the tenant’s renters insurance cover the investment property? No, it will not. Renters insurance is specially designed to cover just the contents of the property. Moreover, it only covers the contents that belong to the renter, so if things like the oven, stovetop, water heater, and other appliances are provided by a landlord, those items will not be covered by the renter’s insurance policy.

How Does Landlord Protection Insurance in Colorado Springs Differ from Homeowners Insurance?

Landlord protection insurance and homeowners insurance are similar, but they are not the same. Both will cover the structure itself, but homeowners insurance covers the contents of the home, as well as other things like the garage, as mentioned previously. However, there are other critical differences to understand here.

Liability

One key consideration with dwelling property insurance in Colorado Springs versus homeowners insurance is liability coverage. Dwelling property insurance does not cover the property owner’s liability in the event that someone is injured on the property or their property is damaged during a visit to the property. Securing this coverage requires an additional rider. On the other hand, homeowners insurance does cover liability in these instances.

Do landlords require liability insurance on rental properties? Yes, they do. Standard property dwelling insurance policies may not offer liability protection, but policies designed specifically for landlords may include this coverage (landlord protection insurance for Colorado Springs real estate investors). Landlords should work with their insurance agent to understand their needs in terms of liability coverage and find a policy that offers that.

Additional Structures

As mentioned, homeowners insurance covers other structures on the property, such as garages and sheds. Dwelling property insurance usually does not – it applies only to the primary structure. What should landlords do? Considering that many investment properties in and around Colorado Springs include additional structures, finding coverage for those structures is important.

Landlord protection insurance offers the additional coverage necessary. However, landlords may also be able to purchase a separate rider and add it to their dwelling property insurance, although this may actually cost more than buying landlord-specific coverage. Again, working with an experienced insurance agent can help ensure that landlords find the right level and type of protection for their unique needs.

Appliances

Most rental properties come furnished with essential appliances renters will need, such as an oven, a furnace, and a water heater. However, those appliances belong to the landlord, not to the renter, so what coverage is offered here? In most cases, dwelling coverage will also cover specific, landlord-owned appliances, while it will not cover other contents of the dwelling. With that being said, this may not be true of all dwelling property policies. Landlords should verify with their insurance agent which appliances and other contents are covered and which are not.

Loss of Rental Income

Landlords depend on their investment properties to generate income. Without that stream of income, they may face challenges in meeting their financial obligations. Dwelling property insurance in Colorado Springs may not cover loss of rental income. Landlords should verify with their insurance agent whether rent loss insurance is included with their policy. In some cases, it will need to be added as a rider, even with specific landlord protection insurance policies.

Building Code Coverage

Landlords are required to ensure that their rental properties are up to code. However, codes change over time, and it can be challenging to keep up with the changes. The challenge here is that if a property is damaged and is not within the current building code, it will need to be updated before it can be rented out once more. That can be costly. Landlords should consider building code coverage for their properties, which is usually only available as an optional rider.

Non-Occupied Dwelling Endorsement

What happens if a property is damaged when it is not occupied by a renter? In some cases, dwelling property insurance and even more specific landlord protection insurance may not provide any coverage, particularly if the property has been vacant for 30 days or longer. A non-occupied dwelling endorsement provides peace of mind for landlords so that if damage occurs when the property is vacant, they will be covered.

Choosing the Right Insurance

Dwelling property insurance for Colorado Springs real estate investors is an important consideration. However, it may not offer all the protection needed. Real estate investors should work with their insurance agent to determine exactly what coverage is included and then work to customize their landlord protection insurance to their budget, needs, and situation.

Anyone who rents out a home in Colorado Springs should be aware of what landlord protection insurance is. It’s a special type of insurance that can be purchased by someone who rents out a property that they own. Most of the time, this insurance has two separate levels of coverage: liability protection and property protection. Each of these types of coverage is designed to protect a landlord from suffering financial losses while operating the business.

Property Protection for Landlords

With landlord protection insurance, the property protection is what helps cover the actual physical property of the home that is being rented to someone else. This can include the dwelling itself but also all of the equipment kept on-site to maintain it and keep it in excellent condition. Some of the things that are typically covered include:

• The Property – Dwelling property insurance in Colorado Springs is what covers any repairs that need to be made to a rented apartment, condo, or home if it is a covered loss. Some of the most common examples include damage by hail, fire, lightning, or wind.

• Additional Structures – The policy will typically also cover repairs to any detached structures located at the rental property. This includes things like fences, detached garages, and sheds as long as the losses are covered under the policy.

• Equipment and Tools Use to Service the Rental – Items like snowblowers and lawnmowers that are left at the rental property are often also covered if they are damaged in one of the situations listed above. However, these items have to be used to maintain and service the rental. If someone has personal items like a radio or a bike at the rental, those things are not likely to be covered.

As with other types of insurance, all of the coverage options above are subject to limits and deductibles. All of these things will be spelled out in the paperwork for the landlord protection insurance policy. The deductible is the amount a person needs to pay under a covered loss before the insurance will start to take over. The limit is the maximum amount that the policy will pay after a loss occurs.

Every insurance policy is different so it’s important to look at the deductibles and limits when choosing one. In some cases, individuals can set their own limits and deductible amounts.

Liability Protection for Landlords

In addition to property protection, most dwelling property insurance in Colorado Springs also has liability protection. This is an entirely different type of coverage that is used if an owner needs to pay legal expenses or medical bills in a case where someone is injured at the rental property and the landlord is considered to be responsible.

As an example, if a tenant falls going down the stairs at the rental property, a court might determine that the landlord failed to maintain the railing or stairs. In this case, the landlord would be responsible for legal, medical, and other costs related to the fall that occurred.

Having top-notch landlord protection insurance assists with paying those expenses up to the limit of the policy. In many cases, there is no deductible to pay for liability claims.

What Isn’t Covered Through Landlord Insurance

Many of the expenses that someone incurs as a landlord will be covered with landlord protection insurance, but not all of them will. Most policies are going to have exclusions that will not be covered. As mentioned earlier, this can vary by provider. However, some landlord policies do not cover the items mentioned below:

• Equipment Breakdowns and Maintenance – If this exclusion is in place, a landlord will need to pay out-of-pocket for maintenance or equipment that breaks down. This might include something like a dishwasher or a furnace that no longer works. If the insurance won’t pay for this, the repairs or replacement are the responsibility of the landlord.

• Shared Property – Some tenants live in the same home as a landlord, either in a specific room or on a specific floor. Based on information from the National Association of Insurance Commissioners, these situations do not quality a landlord to take out landlord protection insurance in Colorado Springs. Instead, these policies are designed for properties that the owner does not occupy. Individuals can speak with their insurer to determine whether coverage can be added to a homeowners insurance policy for the part of the house that is being rented out.

• Tenant Belongings – Most of the time, landlord insurance will not cover the personal possessions of a tenant. Instead, the tenant will be required to purchase their own policy of renters’ insurance. Many landlords require a tenant to show proof of this coverage before being allowed to sign a rental contract. This insurance policy helps a tenant replace or repair personal belongings if they are damaged in certain situations, like theft or fire.

Additional Helpful Coverage

Based on many factors, such as the rental condition, the neighborhood, and the geographic area, some landlords will want to add extra optional coverage to their landlord protection insurance. Some options to consider include:

• Building Codes – Individuals replacing or repairing part of a rental after damage may be legally required to upgrade things like ventilation or wiring. The reason for that is because building codes can change after the property has been built. This coverage assists with these costs.

• Burglary – Typical landlord insurance may help repair a home after a burglary, but it won’t cover the items that were stolen. This optional coverage can help with the theft of items left on the property to maintain it, such as a lawnmower.

• Vandalism – Optional coverage is available for situations where vandalism damage needs to be repaired. This typically is not covered by traditional landlord protection insurance unless it is purchased as an addition.

Landlord protection insurance is essential for avoiding huge expenses when something goes wrong. It protects the landlord and the property that is being rented. Many insurance providers offer this type of coverage, so it’s important to research the options to get the coverage level needed at a reasonable price.