What kind of Insurances does the landlord need

Question

As a landlord, I own several rental properties, I manage the properties by myself, I also hire the contractors / handymen to do the repairs when the rental Properties have problem, so what kind of Insurances do I have to buy in order to protect my properties and protect myself? I have Rental Properties Policy, I know it is not enough, what else insurance do you suggest? Thanks

David M. · Answer

@Gary Li

send me a direct message so we can talk in detail

Gary Li · Answer

I am not sure if the forum allow to talk about the name of the Insurance, I called three big Insurance company, all of them said no. they all say that belong to the Workers Compensation. so if you have any new finding, please share with us.

Thanks

David M. · Answer

@Gary Li

Oh, well, my regular insurance will only issue three rental property polices.  My I went to an insurance broker to get additional coverage.  My current umbrella should cover everything --- maybe I should give a call to double check.

That's a little odd about the Umbrella coverage you mentioned.  Is that with or without having an underlying policy?  My understanding is that hte umbrella policy is supposed to kick in after the underlying policy is exhausted.  On my mine, all my other policies are declared on the umbrella i believe.

Maybe you should call around...

Gary Li · Answer

Hi David,

I appreciate you share your experience and information with me!

I encounter the problem is, my "regular" Insurance do not sell the umbrella if the rental properties are more than 4. also I asked my insurance agent about the Umbrella coverage - typical example: I hire a handyman to paint a room, he hurts himself, my agent said the Umbrella Insurance would not cover this.

I just curious, here in the forum, there are many investors have dozens properties, they are not big, they are not that small,  what types of insurance they bought to protect themselves? Thanks

David M. · Answer

@Gary Li

Hmm...  I don't know much about insurance.  I know in NJ all the policies seem to be the same.  They even have two to three digit codes to refer to them.  So, you are really shopping on price and customer service.  For residential umbrella policies, I believe the limit is $5M.  Commercial properties should probably go higher.

I just use my "regular" insurance company because of the multi-policy discount and service we know they provide.  Otherwise, you could use just about anybody as far as i know.

You are holding Title to your properties under you personal name, right?  Then, your regular insurance and umbrella will cover you if your workers don't have coverage.  Its really not much different if you hired somebody to do some work in your own residence and something happened.  Your homeowner's insurance would kick in.

Does that help?

Gary Li · Answer

Thank you, Frank, David!

For the Umbrella Insurance, do the different Insurance companies have same coverage? which company has better coverage and no limit of the properties? and do not need the car insurance with them?

for hire the contractor/Handymen to do the repair, in case they do not have insurance, what kind of insurance should I buy to protect myself?

Thanks

David M. · Answer

@Gary Li

You should have your own homeowner's insurance (sometimes / usually also called landlord's insurance) for each property.  Its the same but different as a regular homeowner, but obviuosly geared more for landlord...  You should look into an Umbrella policy which generally has limits betwen $1M to $5M.  For that amount of coverage, the premium really isn't that much at all.  The umbrella's coverage kicks in "over and above" any of your existing coverages (I've never heard of not having the first applicable policy as opposed to just an umbrella).  The umbrella policy should only cover liability so you need the 'base applicable' policy.  I gather you are holding the properties in your personal name...  In which case, the umbrella should kick in on all your policies (e.g. your personal home, auto, etc.)...

You should make sure that your contractors have their required General Commercial Liability (CGL) policy (and whatever other insurance they are required).  Yeah, its pretty uncommon for a homeowner to ask (at least in my area), but since you are asking here.  You could check that their licenses / registrations are in good order.  In NJ, you can't have a Home Improvement Contractor license without GCL and Workmen's Comp ins.  If anything should happen, you want to make sure they have coverage otherwise the liability will roll up to you being the employer (that's what I was told).

Hope this helps.  Good luck.

Frank Hinck · Answer

@Gary Li

Consult and insurance broker.   Ask about an Umbrella policy across all your properties, it will also make for less headaches having to remember paying for 5 insurance bills at different times.