10 Tips for Keeping Your Rental Property Investment Insurance Costs Down

Landlord insurance isn’t something you want to skimp on. If you cut corners, you might save a buck or two now, but if you ever suffer property damage or face a lawsuit, you could end up paying much more. You need robust coverage, but you don’t need to overpay. The following 10 tips can help keep your landlord insurance costs down.

1. Prevent claims whenever possible.

If you have frequent or severe claims, you will ultimately pay more for insurance. Therefore, preventing claims is a good way to keep your insurance costs down.
For example, frozen, broken pipes are a common source of insurance claims, but they’re often preventable. Keep an eye on the weather forecast – if it predicts freezing temperatures, send a message to your tenants informing them of how they can prevent frozen pipes. If freezing temperatures are common in your area, invest in more permanent solutions, such as better insulation for your pipes.

2. Stay on top of maintenance.

Insurance does not cover losses caused by normal wear and tear. You’re responsible for keeping your property in good shape. If you don’t, you could end up with many uncovered costs that you could have avoided.

Good property maintenance can also help you avoid certain types of claims. For example, repairing damaged or missing caulking can help you avoid water damage. 

3. Take good care of your roof and gutters.

The roof keeps your building safe from the elements – but only if it’s in good condition. Receive regular roof inspections and replace damaged or missing shingles. Plus, pay attention to your gutters: clogged gutters can prevent proper drainage, resulting in water damage and ice dams. 

4. Keep your property safe.

Safety protocols and a very important for keeping landlord insurance down. One liability claim can easily result in a six-figure loss. 

If someone is injured on your property, you could be sued. You can prevent injuries by reducing hazards. For example, you should fix broken steps, torn carpets, and cracked sidewalks to prevent tripping accidents. Clear ice and snow to prevent slips and falls. Also make sure you have sufficient lighting to ensure people can see where they’re walking at night. Finally, adjust timed lights when the days get shorter in the fall and winter and replace lightbulbs as they burn out.

Fire safety is another important issue. Keep fire exits clear at all times. In addition, make sure you provide enough fire extinguishers and smoke detectors and that they’re all in working condition. 

5. Keep your property secure.

Good security also contributes to your tenants’ safety. Vandalism, burglary, and other crimes can lead to claims. Prevent criminal activity on your property by investing in appropriate security measures, such as good lighting, security cameras, security guards, and gates.

6. Don’t neglect to landscape.

Landscaping is important for both safety and security. For example, overgrown branches could break off and cause property damage during a storm. Overgrown vegetation can fuel a fire, increasing the amount of damage. You should also consider whether your plants are providing criminals with places to hide on your property.

7. Invest in hazard mitigation.

Natural disasters can lead to major claims, but you may be able to reduce your risk by investing in upgrades. For example, if your property is located in an area with a flooding risk, implement some of FEMA’s suggestions, such as installing flood vents and replacing carpet with tiles. If you live in an area with wildfire risk, see CAL FIRE’s tips for fire hardening.

8. Don’t pay for coverage you don’t need.

Deciding which types of insurance coverage you need can be tricky. You don’t want to go without a coverage to save money, only to later learn that you actually needed it. For example, you may decide to forgo law or ordinance coverage, only to be hit with huge out-of-pocket costs to meet building code requirements after property damage.

On the other hand, you don’t want to pay for coverage you don’t need. This includes coverage for things where the risk of loss is incredibly unlikely and for costs you could cover on your own. For example, if you live in California, earthquake insurance might be a good investment, but if you live in an area without significant seismic activity, it may be an unnecessary expense.

9. Choose a higher deductible.

The deductible is the amount you are expected to cover out of pocket when you file a claim. Different types of losses may have different deductibles.

For example, let’s say a storm damages your roof; the repairs will cost $10,000 and your deductible is $1,000. Assuming your policy fully covers the claim, the insurer will pay $9,000 and you’ll be responsible for the $1,000 deductible.

Policyholders can often choose whether to have a higher or lower deductible. In general, choosing a higher deductible lowers your premium cost, whereas choosing a lower deductible increases your premium cost. If you want to keep your premium costs down, consider opting for a higher deductible – just make sure you’re capable of paying the deductible you’ve chosen if you have a claim.

10. Work with a specialized insurance partner.

If you insure your multi-family property with the same insurance agency or carrier that you use to insure your personal home, you may not get the best coverage or the best rates. That’s because they may offer you a generic business insurance package that may not be tailored to the unique needs of landlords. Standard business insurance packages may include and require you to pay for some standard coverage features that you will never use. They may also omit some landlord-specific coverages that you should really have. A specialized partner will provide a policy that is designed for your business. Get a quote and see how much you can save with Honeycomb.