Navigating Property Insurance for Colorado Springs Rental Properties - Article Banner

Owning rental properties in Colorado Springs is almost always an excellent investment, but real estate also comes with many risks. From property damages to liability claims, landlords need to protect their tenants and their investments. A reliable property insurance policy can help you mitigate financial losses in case of unfortunate and unexpected events. No one spends their time planning for disasters. It’s why you insure your most valuable assets. 

There’s a lot happening in property insurance markets, even in Colorado, where we aren’t at particularly high risk for natural disasters, but where floods, fires, and heavy snows are always possible. 

Understanding your particular risk factors and how to protect yourself against them can ensure you are a successful investor. It can also protect the condition and the long-term value of your Colorado Springs rental property. 

Here’s how to navigate property insurance and how to be sure you have all the coverage you need.

Types of Property Insurance Policies Available for Rental Properties

The most common type of property insurance for rental properties is the Dwelling Insurance Policy. It covers dwelling coverage, personal property protection, liability coverage, and loss of rent. 

If you’re renting out a property that was once your primary residence, you’ll need to switch your homeowner insurance policy to a landlord insurance policy. The dwelling coverage is pretty similar – a landlord policy will cover anything that happens to the property and will pay for repairs or replacements that are necessary after a covered loss. 

The main difference between your landlord insurance policy and the homeowner insurance policy you have on the home you live in is that your landlord policy covers the structure of the home and the costs to repair and replace it. However, it doesn’t cover any personal belongings that aren’t yours. 

Once you convert from a homeowner’s policy to a landlord’s policy, your own possessions are covered, such as appliances. But, your tenant’s personal items are not the responsibility of you or your insurance policy.  

A landlord policy generally provides more liability coverage than a homeowner policy as well. This is necessary due to the added risk that you assume as a landlord.

  • Liability Coverage

Part of your property insurance will be liability coverage. Perhaps the best reason to buy a robust insurance policy as a landlord is to cover any potential liability and protect you from the risk of claims, lawsuits, and disputes. 

A comprehensive landlord insurance policy will provide you with a comfortable amount of liability coverage. You’ll need this insurance if a tenant falls down the stairs or a tenant’s guest slips and falls and gets injured. You have to be prepared for any potential claim or legal action.

Liability coverage will cover more than you might expect. It will help you pay medical expenses and cover legal defenses and court judgments. Pay attention to policy limits and talk to your agent about including coverage for situations in which harm might be caused to a tenant or a tenant’s guest. 

  • Loss of Rent Coverage

Another important component of your property insurance is loss of rent coverage. What will you do without rental income if your property becomes uninhabitable and your tenants need to move out while repairs are made? You’ll want to ensure your rental income is not disrupted. And, you’ll want to make sure you can afford to pay their hotel bills, if necessary. 

If your landlord policy doesn’t already include loss of rent coverage, consider adding it. This coverage is typically called Fair Rental Value Coverage. It will cover lost income due to your property being declared unlivable due to a covered loss.

  • Inflation Protection 

What does your property policy say about inflation? Talk to your insurance agent or Colorado Springs property manager about this important protection. Recently, Inflation Protection has become more important than ever. Your property value has likely increased over the last two years, with prices for everything being driven higher and higher. When you have Inflation Protection built into your policy, you’ll find that it automatically adjusts your coverage limits to keep pace with inflation. This adjustment should include premium discounts.

Understanding Your Property Policy and Your Insurance Company

It’s essential to understand your insurance policy to ensure it adequately covers your property and meets the needs of your investment. For example, flood insurance is tricky. It’s not included in most property insurance policies, but if your rental home is in an area at risk for floods, you’ll want a separate flood insurance policy. And, you’ll have to understand its exclusions and what qualifies as flood damages to avoid being caught off guard. 

It’s also important to understand your coverage limits. Do you have enough insurance to cover potential property and liability damages? Always investigate how much your insurance company charges for deductibles, and make sure it’s part of your budget in case a claim needs to be filed. 

When choosing an insurance company, consider their ratings, financial stability, and reputation in the industry. Working with a responsive and reliable insurance company could ensure a hassle-free claims process if an unfortunate event occurs. If you’re not sure where to find a reliable and reputable insurance agent, talk to your local Colorado Springs or Pueblo property management company. 

Renters Insurance and your Colorado Springs Tenants

At Muldoon Associates, we require renter’s insurance. 

Tenants who rent homes with us must show proof that they’ve insured their belongings and protected themselves against potential liability issues. It’s not always easy to enforce a rental insurance requirement, but it’s worth writing one into your lease agreement and explaining why it’s important to your tenants. You need the peace of mind, and your tenants will be pleasantly surprised to find out how inexpensive a renters insurance policy usually is.

This is also not uncommon. You and your tenants will find that a lot of landlords are requiring a renters insurance policy before a tenant is permitted to move into their home. Educate your tenants on the need for this coverage. Most of them don’t know that their own personal electronics, clothing, and other belongings aren’t covered by your insurance. 

Who Should you Include on your Insurance Policies?

Who, exactly, is protected by your landlord insurance policy and your tenant’s renters insurance policy? 

This is an important question, and it demonstrates the importance of making sure you’re covering and naming everyone who needs to be covered and named. 

On your landlord policy, you should include your Colorado Springs property manager as an additional insured. This isn’t because we need the coverage – we have our own insurance – but because it allows us to better protect your investment. We’ll be notified if the policy is terminated or coverage lapses. We can prevent you from being left without any insurance in force. 

It also helps us form a unified defense when necessary. If a tenant is going to sue, they’re going to sue everyone. When we’re both defended under one policy, we’re in a stronger position against the claim.

Our tenants are also instructed to include us as an additional insured. This allows us to monitor the policy and ensure it’s kept current. 

Property Insurance Costs and Discounts

Cost of Property InsuranceWhen it comes to the cost of property insurance for a rental home, there are multiple factors that can impact the overall price. The location, age, and condition of the home are all taken into consideration, as well as the coverage options selected. 

While property insurance may seem like an added cost, it’s important to consider the potential financial risks of not having it. The good news is that many insurance companies offer discounts for various reasons, such as installing safety features or bundling policies. You can save money just by installing a handrail on steps that lead to the basement, for example. 

It’s a good idea to shop around and compare quotes to ensure you’re getting the best coverage for your money. Ultimately, investing in property insurance can provide peace of mind and protect your investment in the long run.

And, remember this: insurance premiums paid on your rental property are tax deductible. This helps you feel better about the cost of covering yourself and your property. 

Owning rental properties can be a lucrative investment if you’re taking all of the necessary steps to protect your properties and investments. Invest in a reliable property insurance policy. This is essential for your own peace of mind and in order to protect your property’s value and condition. 

It can be time-consuming; the effort you’ll have to invest into researching property insurance policies and choosing the best one for you and your portfolio. If you’re struggling to find exactly what you need or you’re not sure where you should focus, talk to a Colorado Springs or Pueblo property management company. We’re here for you, and we can help you choose the right policy and the right insurance partner. 

We know insurance is a huge topic. If you’d like to talk more about how to protect your investment property in Colorado Springs, please contact us at Muldoon Associates.