Saving Money for Property Insurance

Property investment can be a lucrative business. In fact, its reputation as a great way to build wealth has given many people the impression that it’s an “easy” way to get rich quick, with minimal risk or cost to the investor. This couldn’t be further from the truth, though, and many new investors have learned the hard way that there are plenty of expenses that chip away at their profit each month. The one we want to focus on with this post is insurance, which is a necessity for any investment property.

While it’s usually not difficult to secure a decent insurance policy for your investment property, it often comes at a price – and one that can significantly impact your cashflow if you’re not careful. This is why it’s helpful for investors to arm themselves with a few tips that can help them save a little bit of cash on their insurance policy, because let’s be honest here, every little bit counts!

Tip #1 – Find a reputable, trustworthy agent.

Far too many investors make snap decisions and jump into an agreement with Joe Blow the Insurance Agent, who – shocker! – doesn’t have the investor’s best interests in mind. Just because they have the lowest premiums or what appears to be the best coverage, doesn’t mean it’s the best choice for you. Before settling with an agent, take the time to ensure that they have a solid reputation (i.e., get some referrals from other investors) and are familiar working with investment properties. Once you’ve decided on someone, plan to meet with him/her every now and again to review your policy and make sure no adjustments need to be made. This little bit of homework can wind up saving you big time if the day ever comes that you need to actually use your policy.

Tip #2 – Don’t file a claim unless you absolutely have to.

Think long and hard before you decide to file any sort of claim with your insurance company. Once they see you as a risk (which they will, if you make a claim), your rates are going to skyrocket, so be very careful about what you claim. In fact, we recommend only taking this action if there’s a major catastrophe and your property is a total loss. While instances like roof damage from a hailstorm or a rotten subfloor due a leak CAN be claimed, it doesn’t mean they SHOULD be – not if you want to save money over the long haul, that is.

Tip #3 – High deductibles aren’t necessarily a bad thing.

Don’t let a high deductible scare you off from an otherwise great policy! This should not be a deal breaker, especially if you’re following Tip #2. Higher deductibles usually mean lower premiums, and lower premiums mean more money in your pocket each month.

Tip #4 – Bundle your insurance packages.

Want to potentially save a bundle? Then bundle your insurance packages! Talk to the agent who handles your car, home, or life insurance, and see if they offer a discount for having all your policies in one place. Many insurance companies do this, and it can save you a nice chunk of change.

Tip #5 – Add liability insurance to your package.

Your investment property isn’t the only thing you want coverage for. You also need to cover your tenants – which will in effect cover YOU. Surely you’ve heard stories about a clumsy tenant falling down the stairs and blaming it on the landlord somehow, and then that landlord having to shell out the cash for medical bills, missed work, undue stress/trauma, etc. Whatever the case, you do not want to be in this situation, which is why you need to protect yourself with liability insurance. In the event something does happen to one of your tenants, this type of insurance will be your saving grace.