Why Benham and Reeves Residential Lettings Argue that Inflation is Great News for Buy-to-Let Landlords

Inflation is on the way back.
The Consumer Price Index has risen 0.6% from June to July (and is now over double the Bank of England’s official target of 2%) and the Retail Price Index (excluding mortgage interest bills) has increased by 0.5% to reach 5.3% (which is over double its old 2.5% target). The main factors for inflation are coming from abroad in the form of rising fuel and food prices with food and non-alcoholic drinks increasing at a record pace. A survey by The Economist of 55 countries has shown that 12 have double digit inflation rates.

Is inflation good news for landlords?
Most economists argue inflation is bad for the economy. The lack of stable prices makes economic decisions very difficult for both businesses and consumers. Landlords suffer from rising costs and prices, like any other consumer. Marc von Grundherr, Lettings Director of Benham & Reeves Residential Lettings, comments that in the past few years’ landlords have suffered from massive labour price inflation, as skill shortages have increased the costs of using tradesmen, such as plumbers, builders and decorators. Plus there have been other cost increases, such as accountancy and buy-to-let insurance rates, which continue to climb. But the main advantage of inflation for landlords is that many have used a buy-to-let mortgage to secure their property investment and inflation can reduce the value of their buy-to-let loans.

Benham & Reeves Residential Lettings’ Marc von Grundherr, advises how inflation reduces a buy-to-let mortgage.

Inflation and buy-to-let loans:
If a landlord takes out an interest only buy-to-let mortgage of £100,000 over a period of 20 years in a zero inflation economy (e.g. in Japan), then in 20 years’ time that buy-to-let loan would still have a real value of £100,000. But if inflation runs at the current Bank of England’s target rate of 2%, in 20 years’ time, the actual real value of the buy-to-let mortgage will have reduced to £67,297. If, however, inflation runs at double the Bank of England’s target rate at say an average of 4%, then the real value of the buy-to-let mortgage falls to below half its original real value to £45,639.

Inflation and buy-to-let loans:
If a landlord takes out an interest only buy-to-let mortgage of £100,000 over a period of 20 years in a zero inflation economy (e.g. in Japan), then in 20 years’ time that buy-to-let loan would still have a real value of £100,000. But if inflation runs at the current Bank of England’s target rate of 2%, in 20 years’ time, the actual real value of the buy-to-let mortgage will have reduced to £67,297. If, however, inflation runs at double the Bank of England’s target rate at say an average of 4%, then the real value of the buy-to-let mortgage falls to below half its original real value to £45,639.

A great time to be a landlord:
So with house prices falling and labour and insurance costs rising, many feel it’s a bad time to be a Landlord, but Marc von Grundherr of Benham & Reeves Residential Lettings argues this simply isn’t true – and states that “Professional landlords know that it’s a great time to buy because:

1. They can pick up buy-to-let properties at bargain prices.
2. Rents are increasing rapidly.
3. Borrowing costs are dropping. The Bank of England has cut interest rates three times this year and is doing its best to keep them as low as possible.
4. Inflation is shrinking the real value of buy-to-let loans.

So landlords are finding that in the present market borrowing is cheap and their debt balance is devalued due to inflation running above the Bank of England’s targets.

Obtaining Business Insurance

Think of business insurance as the copper solder that fuses a plumbing joint together; if the joint leaks, there can be major ramifications. The same holds true with business insurance; if you don’t have the coverage that a backflow prevention contractor business really needs – you’ll watch those profits flow right down the drain. You personally cannot control or eliminate every potential risk that threatens your livelihood, but business insurance can provide the added protection against these risks … if you carry the right kinds.

Choosing the right policy with all of the appropriate coverages can be a challenge when you are a backflow contractor/technician. Bob Smart, commercial lines director of Compass Insurance in Highlands Ranch, Colorado, states: “Everybody wants to lump each backflow contractor/tester/tech into the plumbing category, when in fact they are not all plumbers; that was my point of contention with the insurance carriers. I explained to Hartford [insurance carrier] that the backflow techs test the backflow apparatus – then they make a report on the valve they tested or they repair or replace the valve. They are not going in and tearing out water lines or sewer lines.

“What Hartford did…was to cover these backflow techs under an engineering class because it’s obviously more about reports and paperwork,” he continues. “I had over 30 backflow techs insured through Hartford under this engineering class and never had one claim.” Hartford has since modified this particular class of coverage with regards to backflow techs and currently does not cover backflow techs that work on fire lines, i.e., sprinkler systems, suppression systems; supplementary coverage is required or a different class should be selected.

Find an agent who understands your business.

A key component in selecting insurance coverage for a backflow contractor/technician/tester is to make sure that your agent fully understands what it is that you do and don’t do in the course of your work day. “If one agent wants to place you in the plumber class – which can cost upwards of five times the annual premium of let’s say an engineer class – find an agent who is willing to listen and really understand your business, “ says Smart. “If all you do is test backflow apparatus, then you shouldn’t be placed in a plumber class.”

Regrettably, insuring your business is not as simple as insuring your car. Because this business is unique, you’ll need to draft a package of insurance that meets your business needs and provides the level of protection you’re comfortable with.

Your first decision is to decide which types of insurance your business needs. Two types that all businesses need are property and liability insurance.

Property and Casualty Coverage

Property insurance protects the assets your business owns, including the building and equipment, from destruction or damage. Even if you run your business out of your home, you’ll need to protect your business assets with separate property insurance; your homeowner’s policy will not cover business equipment. There are two general types of property and casualty coverage: All Risk Coverage and Named Perils Coverage. As the names imply, “All Risk” will cover you for almost any type of loss whereas “named peril” coverage will only cover you for specific named causes of loss, such as fire. You need all perils coverage. Even with so called all peril coverage there will be exclusions. Make sure and review the exclusions in the policy. If there are exclusions in the policy that are important to you, you may want to try another insurance company or purchase specific coverage for the excluded situations.

Property insurance is also written as either replacement cost or actual cash value. The first will cover the actual cost necessary to replace the lost property (less the deductible). The actual cash value policy will only pay you the depreciated value of the property — almost never enough to replace what you have lost. Unless the cost is prohibitive, you should purchase replacement cost coverage. Even with replacement cost coverage you will need to make sure you have purchased a high enough limit. If your building and contents are worth $1.5 million and you only have $1 million in insurance, a total loss would still leave you $500 thousand in the hole.

To determine how much property insurance you’ll need, create an itemized list of your business’ assets and their individual dollar values. Then decide which assets you actually want to insure and for what value, which will determine the insurance premium. In some cases, you may decide against insuring a particular asset, because it just doesn’t warrant the cost of the premium. In other cases, the premium may be well worth paying.

General Liability

Liability insurance is the other kind of insurance no business should be without. General liability is just that — very general in nature and protects your business from liability arising from negligence on your part that may cause injury to others, such as a customer or employee. It also protects your company if someone is injured as a result of using your service. When you consider that the legal expenses, settlement or judgment expenses of a single lawsuit could drive your business into bankruptcy, you’ll see why this kind of insurance is considered a “must-have”. Also check whether or not your general liability insurance policy also covers product liability for the valves you may be replacing. If not, you’ll want to add this type of specific liability insurance to your package. You should include “Errors and Omissions” coverage which protects you in the event you are sued as a result of a mistake in your work.

What limits of General Liability should you purchase? According to the Insurance Industry at-large, the absolute minimum in this day and age should be $1 million; most businesses should consider increasing this to $2 or $3 million. The good news is that insurance is not priced on a straight line basis. Since smaller claims are much more likely than large ones, the first $1 million in coverage will cost the most; an additional $1 to $2 million will not cost double or triple the amount.

Different types of liability coverage have developed over the years do address specific business needs. When buying a liability policy, you should be aware that there are two types of coverage, occurrence coverage and claims-made coverage. Occurrence coverage is more expensive but covers you based on when the loss happened, even if it was many years ago. Claims-made coverage only covers you while the policy is in force and the claim is made. With occurrence coverage, as long as you always have some policy in force, you will not have gaps in coverage. With a claims-made policy, it is possible to have gaps when you have not coverage in force.

Commercial Auto Coverage

If you use any vehicles in your business, you need commercial auto coverage. Personal auto policies generally exclude coverage if the vehicle is used in business; be sure to read your policy or ask your agent. Otherwise, vehicles used in business need business auto coverage. The good news is that commercial auto coverage is usually very competitive and can even be cheaper in some cases than personal auto coverage. As is the case with General Liability, you should purchase at least $1 million in limits.

Worker’s Compensation

If you are a backflow contractor that employs other backflow techs in your business, Worker’s Compensation is insurance you will want to carry. It is surprising that this is often the most misunderstood business insurance coverage since it covers exactly what it says. This coverage reimburses workers who are injured on the job for lost wages, medical and rehabilitation costs. It is required by law in virtually every state. Generally, there are two aspects of this coverage: the first covers the lost wages and medical costs of the injured employee; the second covers the employer’s liability should the injured employee or his family decide to sue. In most states the worker’s compensation system is the sole remedy for an injured worker. As a small business owner you will likely have the option of excluding yourself from worker’s compensation coverage in exchange for a reduction in your premium. Weigh this option carefully in light of your personal medical insurance, which may have an exclusion for job-related injuries.

Business Interruption Insurance

Additionally there is insurance business owners may also want to purchase to protect their businesses from incurring the kinds of losses that can close their doors: Hurricane Katrina is just one example of an unforeseen natural disaster that could force you to suspend your business operations; floods, tornadoes, and wild fires are other examples. Or, on a more commonplace level, your business could be the victim of vandalism or theft. Business Interruption insurance protects you from the loss of revenue incurred when you’re forced to close down. It usually has an interesting deductible based on the number of days you are out of business rather than a dollar amount and will generally only kick in after your business has been down X number of days. The premium for this coverage will be based on your business income and reimbursement will be made according to your average of income.

Umbrella Insurance

Is it actually possible for you to buy an insurance policy that can save you money on other insurance policies? It is and an umbrella policy is a great example. An umbrella policy is a type of liability coverage that protects you if there is a judgment against you that is larger than your limits of coverage in your General Liability or Commercial Auto policy. The good news is that since the umbrella policy is secondary, the premium can be very inexpensive. What is even better, it may be possible for you to lower your limits on your General Liability or auto policy to something less than $1 million, purchase a $2 to $3 million umbrella policy and save money overall.

Disability Insurance

Since you’re a business owner, you should also carry some kind of disability insurance. There are various kinds of disability insurance available that are tailored to the needs of business owners. All of them involve paying premiums now to cover your lost income if you become disabled or unable to carry on your business. If your business is dependent upon the expertise or knowledge of particular people in your company, you should also consider key person insurance. This type of plan helps to compensate a business for financial losses due to the death or long term disability of a key person. The insurance provides additional funds to the business until the key person can be replaced, or until he or she returns to work.

Business Owner’s Policy

Properly covering your business is a complex task, involving multiple policies each of which has its own limits and exclusions. Many small business owners can satisfy many of these through a package policy known as a Business Owner’s Policy or BOP. Often the BOP policy is priced very competitively and allows some level of customization through purchasing of additional limits and coverages. It is only available for businesses up to a certain size – ideal for a small backflow contractor — and varies from carrier to carrier. You should ask your agent.

Reading an insurance policy contract can be a daunting task. Their structure can be very confusing and they are loaded with special definitions. Despite this, it is critical that you understand your coverages; your agent can help. However, when all is said and done, just like everything else in your business, the final responsibility rests with you, the owner.

Being a successful business person means being able to anticipate events and plan for the future. Business insurance is one way of ensuring that you’re in control of your future rather than being controlled by it. Unfortunately, there is no generic plan that will meet every small business person’s needs. You’ll need to shop around, just as you would for any product, to get the business insurance that’s most suited to you as a backflow contractor.

Disclaimer

This article is intended to provide general information on commercial insurance for educational purposes only. The material here is not intended to provide specific recommendations for any individual business or type of business. Insurance is regulated in each state by that state’s Department of Insurance. Only a licensed Insurance Agent or Insurance Broker in your state is qualified to provide you with advice on your specific business insurance needs.

Apartment renters insurance: How renters insurance works

There are various reasons why people rent. One reason may be they do not want the hassles and expense that comes along with owning a home. Renting, however, does not exclude you from certain expenses or liabilities. Have you considered what will happen if your apartment or home suddenly became unlivable because of a storm or fire? You can assume your property is protected by the landlord’s insurance. It most cases you would be wrong. The landlord’s coverage most likely will only cover the structural part of the property so if the building goes up in smoke and you lose everything, the landlord will not be responsible for your stuff.

Protecting yourself as a renter is important. Any number of things can happen at any time. Like a homeowner, you need to look closely at insurance. Many insurance companies offer an HO-4 policy that will cover your personal property from such things as fire, lightning, vandalism, theft, damage caused by plumbing, heating, or air-conditioning problems, and explosions. Two things rental insurance will not cover is loss from earthquakes and floods. A separate policy is required for that type of coverage if you are living in a region where that would be a concern.

Insurance companies offer policies based on Actual Cash Value, which pays for what your belongings were worth at the time of the damage or theft, and Replacement Cost Value, which will reimburse you for what it costs to replace the items. If you bought a new mattress five years ago for $1,000, ACV coverage would pay you for what the mattress would be worth today; an amount considerably less than it was five years ago. With RCV, the insurance company would reimburse you the amount it would cost to buy a new mattress today. Most insurance companies use the ACV policies, which carry lower premiums than the RCV coverage but the ACV policy also will pay out less money that the RCV. Both types of policies also will subtract the deductible first.

Like most insurance, your premium for renter’s insurance will depend on where you live and other factors. Keeping a higher deductible can keep your monthly payments lower. There are discounts available for things like smoke alarms and fire extinguishers. It is important that you keep an accurate and updated inventory of your all of your property. A good way to keep track is to videotape everything you own. Keep the video and all receipts for items in a firesafe or a bank safe deposit box off premises. In the event something does happen, you will not need to worry about retrieving your documents from your home.

Renters Insurance Faq

Renters insurance can be confusing, to say the least. Here’s a renters insurance FAQ that explains the basics of renters insurance in simple terms.

Why do I need renters insurance?

Natural disasters like floods and hurricanes are on the rise, theft and vandalism are increasing, and if you don’t have renters insurance you could lose everything you own.

Many renters think their landlord’s insurance will cover damages to their personal possessions, but it won’t. Your landlord’s insurance only covers the building you live in.

What does renters insurance cover?

Renters insurance provides three basic areas of coverage:

1. Personal property coverage pays to replace your possessions when they’re damaged by fire, vandalism, and storms, or when they’re stolen.

2. Loss-of-use coverage pays your hotel and restaurant bills when your residence is being repaired due to damage by fire, vandalism, or storms, and you need temporary living quarters.

3. Personal liability coverage pays for another person’s medical bills and property repair bills when you, your family, or your pet are found responsible for injuring them or damaging their property. It also covers your legal fees if you’re sued.

What’s not covered?

Renters insurance does not cover damage caused by earthquakes or flooding. There are also limits on coverage for expensive items like jewelry, silverware, furs, antiques, and computers. If you live in an earthquake or flood zone, or have expensive items that aren’t fully covered, you can purchase additional insurance.

How much coverage do I need?

You need enough personal property coverage to pay for all your possessions if they’re destroyed, and enough liability insurance to cover all your assets if your sued. Take an inventory of your possessions and use the total value as your coverage amount. Then total your assets – bank accounts, stocks, bond, CDs, etc. – and make sure you have enough coverage to protect them.

How much does renters insurance cost?

Renters insurance is cheap. It can cost as little as $16 a month for $20,000 worth of personal property coverage with $300,000 liability coverage. That’s less than the cost of a music CD to insure all your personal property and all your assets are protected.

Where can I get cheap renters insurance?

The best place to get cheap renters insurance is at an online insurance comparison website. These sites let you get quotes from different companies by filling out a simple questionnaire with information about your residence and the amount of insurance you want. The best of these sites feature a service whereby you can talk with an insurance expert and get answers to your renters insurance questions for free. (See link below.)

Visit http://www.LowerRateQuotes.com/renters-insurance.html or click on the following link to get cheap renters insurance quotes from top-rated companies and see how much you can save. You can get more insurance FAQs in their Articles section.

Renters Insurance Facts – What you Should Know

Homeowners need home insurance and renters need renters insurance. If you’re a renter and you don’t have renters insurance, you’re risking financial disaster. Here are some facts about renters insurance that you should know.

FACT: Renters are not covered by their landlord’s policy

Property owners purchase insurance coverage for their buildings, not their tenants. This insurance covers the building itself from loss. It does not …

* Cover your possessions if they are damaged or stolen.

* Pay your living expenses if your home or apartment is damaged and you have to live somewhere else during repairs.

* Cover you if someone is injured while visiting you.

You need to buy renters insurance to provide these coverages.

FACT: You have more possessions than you think

It only costs a couple hundred dollars a year to buy renters insurance. If you walk around your house and take inventory of everything you own, you’ll realize it would cost much more than that to replace everything. Renters insurance covers all your possessions including:

* Electronic equipment

* Sports equipment

* Clothes and shoes

* Musical instruments

* Furniture

* Appliances

* Kitchen items

* Tools

* Jewelry

FACT: Renters insurance is cheap

You can buy renters insurance for only tens of dollars a month or a couple hundred dollars a year. This will buy you about $30,000 worth of coverage for your possessions and $100,000 worth of liability coverage to protect you from personal liability lawsuits if someone is hurt in your home.

To make sure you get the best rate on your renters insurance, go to an insurance comparison website where you can get fast quotes from multiple A-rated insurance companies. The best insurance comparison websites also let you talk online with insurance professionals and get answers to your rental insurance questions (see link below).

Visit http://www.LowerRateQuotes.com/renters-insurance.html or click on the following link to get cheap renters insurance rate quotes from top-rated companies and see how much you can save. You can also get more insurance facts and tips there.

Home Insurance – All Shook Up!

The recent earthquake that shook the UK in February of this year can be seen as an example that anything can happen in the world, if unexpectedly.

Whilst such incidents are rare in this country, it still managed to cause damage – resulting in an estimated £10 million worth of damage to vehicles, homes and businesses across the country.

For those affected by the freak quake, the advice is to check with your home insurance provider to see if you have suitable cover. Any structural damage should be immediately reported to your house insurance provider, keep a record of all damage and note all repair cost quotes, especially if your property has been deemed unsafe to live in as a result.

Should any of your property have suffered damage as a result it is advisable to take photographs of affected items and vehicles for the purposes of your claim. In the case of vehicles, double-check with your provider to check if your policy will cover any damage caused by the quake – although those on third party, fire and theft policies are unlikely to be successful in their claims, as such policies don’t usually cover natural disasters.

Despite the UK’s low risk level for earthquakes, homeowners still need to ensure that their house insurance is adequate to cover these rare occurrences. Policies, after all, are safeguards against disaster, be they natural or man-made.

Whilst we cannot predict when such incidents will happen, ensuring you have the right cover if something should happen is extremely important. Here are a few handy tips for ensuring you are covered in the event of your property being affected by disaster:

  • Ensure that the total value of your property is kept up to date – and contact your provider in the event of home improvements on the property.
  • Keep an updated list of possessions in the property, and let your home insurance provider know of any significant purchases that could affect your contents cover.
  • Check that your possessions are covered by ‘new-for-old’ cover – which can help recover the value of or replace lost and damaged items. Keep in mind, however, that most providers may not offer this sort of cover for certain items over five years old.
  • Be sure that you have good security features on the property – including deadlocks and alarms – not only will they help protect your property, but by reducing the risk factor you could help bring down the cost of your premium.
  • If you live in an area prone to flooding or other environmental factor, be sure to let your insurance provider know about it, as failure to do so could affect any future claims due to unexpected circumstances.
  • Shop around for the best deals, be sure to compare cheap home insurance policies and to not rush into a decision, for different policies may offer differing levels of cover.

Importance of Home Insurance

Whether you rent or own a home you need to have home insurance to cover those unforeseen circumstances such as theft and fire. Even if you rent you need to have a form of home insurance in order to take care of your own personal possessions. The landlord is only obligated to provide fire insurance on the building, so if you want to protect your possessions you must obtain renters insurance. When most people think of home insurance they think of homeowners’ insurance which covers both the building and the possessions inside the building.

Before you select an insurance carrier for your home insurance you want to make sure you make inquiries of several insurance companies. During your research you want to compare rates and coverage and how they compare to the market in general. Each home insurance company has its own premiums and levels of coverage, so you want to take some time to review what each home insurance company offers before you make your final choice. By taking time to review, you will be able to review in depth the offerings of other home insurance companies before making any choices.

Home insurance is a very important investment and one that every person who owns a home needs to have. Do not settle for just what the mortgage company requires but make sure you protect your personal possessions as well. If you choose to cover only your building you are making a serious mistake because you can lose everything in case of a fire or vandalism.  Make the choice to protect yourself with home insurance. Do some investigation and then choose the home insurance company that offers the most for the money. AHS can put show you where to obtain home insurance for the best prices for your home insurance choices.

Insuring Your Rental Property

Have you ever played a game of Monopoly? If so, then you already understand the basic principles of property investment. You purchase a property, and rent it for profit. But real property investment is no game, and there’s a lot more involved in turning a profit than just passing “Go” and collecting a cheque. Landlords must protect what they own, and should have a good rental property insurance policy in place.

Whether it’s an apartment unit or a family home, landlords have little control over the physical damage that can occur in or on the property they own. Rental property insurance will cover the costs incurred by damage.

Rental Property Protection

Through a well-planned rental property insurance policy, landlords can protect themselves from losses caused by most sources including fire, storms, burglary and vandalism. A comprehensive rental property insurance policy might also include liability insurance, with coverage for injuries or losses suffered by others. The liability clause in a rental property insurance policy may also cover legal fees and the costs of defending a personal injury lawsuit.

In purchasing rental property insurance, it is important to be sure that there is enough coverage to protect all property values and assets. The rental property insurance policy must also cover physical and legal injury, including discrimination, slander, libel, invasion of privacy and unlawful and retaliatory eviction.

Rental Property Insurance Providers

Many insurance companies now offer rental property insurance policies. Review the list below for a few examples of companies offering this protection, along with an outline of their policies:

AAA Insurance Rental Property Insurance

For rental property insurance, AAA Insurance has allied itself with Balboa Insurance Company to provide better insurance coverage. Their rental property insurance features a Dwelling Fire policy, providing protection for most direct physical losses on residential rental properties, and structures attached to them. The AAA policy will cover up to ten percent of the total cost during the process of repairing or reconstruction after a loss.

LandlordZone Rental Property Insurance

This online insurance company is based in the United Kingdom. The company insures rental properties including maisonettes, flats (apartments) and houses, as well as offices, shops and other commercial properties. LandlordZone also provides rental property insurance coverage for HMO (Houses in Multiple Occupation), student and holiday lets, letting businesses, unoccupied properties, asylum seekers, housing benefits and public liabilities. In the rental property insurance for landlord and tenets, the company includes rent guarantee, emergency assistance, tenant’s insurance, property under construction, bed and breakfast, business insurance and second homes.

Renting property is no game. Don’t leave the protection of your property to a roll of the dice. Buy a secure rental property insurance policy, and protect your valuable investment.

Prepare Well Before Plunging Into Buy-to-let or Becoming a Landlord

Recent research from the Association of Residential Letting Agents shows that 40 per cent of existing landlords are planning on making more acquisitions during 2008. But, potential landlords should consider many different factors before committing to letting a property. Performing a full risk assessment and being realistic about the finances required to pay for and maintain the property is essential.

Unless you own a property outright, then you need to consider the best way of financing its purchase. Until recently there were thousands of different buy-to-let mortgage products available throughout the UK, but since the credit crunch, many have subsequently been withdrawn. Those that remain have tighter lending criteria and therefore come with quite stringent conditions. Ensure that you shop around before committing to any lender, and don’t settle for the first offer before checking out others. It may also be wise to opt for a fixed rate buy-to-let mortgage as you can plan your expenses for a fixed period with a degree of certainty.

Being able to withstand a period of non-occupation, or non-payers is also an important consideration. If you can only afford to enter the buy-to-let market based on 100% occupancy of the property, then unless you are extremely lucky you will come unstuck at some point. Many experts recommend incorporating an average two months of non-occupancy when calculating your costs. Also, if you are employing a letting or property agent you will need to include their fees in your costs.

Insurance is vital. If you don’t own the property outright, your lender will insist that you have buildings insurance to protect their asset, and similarly you should seriously consider landlord’s insurance to protect you and your investment. That applies especially if you have a portfolio of properties, or if your property is one of a number in the same apartment block where there are other landlords. Indeed, you and your fellow landlords could pool your purchasing power to leverage a better deal from insurers. Buy-to-let insurance is a specialist product and some insurers in that sector offer complimentary add-ons such as tenant referencing services, which are very useful when it comes to assessing potential tenants.

Buy-to-let insurance can also protect you against owner liability claims, and no-one should seriously think about becoming a landlord without being adequately insured – both against liability claims and for protection of property.

Another important consideration is ensuring that you put aside a sum for regular and emergency maintenance. Things will go wrong and it is best to provide for it up front. Having adequate insurance will also help in emergency situations. Older properties generally require more maintenance so consider that before buying.

So, if you are thinking of becoming a landlord, make sure you assess all the risks, do your research and ensure that you are realistic about what to expect.

Why you should have renters insurance – Part 3

Anyone renting and/or occupying any type of dwelling, house, apartment, military barracks, they do not own or are not buying, needs to have a renters insurance policy. A common misconception is that if you’re renting your landlord’s policy will cover your personal belongings. This is seldom, if ever, the case. The landlord’s policy is going to cover the dwelling in case of loss and has no bearing on the renter. This is also true for individuals living in a military barracks or in a college dorm. You are responsible for your personal belongings. Uncertain whether you need renters insurance? Think about how much it would cost to replace all of your belongings if everything was destroyed. Can you afford to replace everything from your savings account? If not, you need renters insurance.

Renters insurance policies are basically simple to understand and are typically very inexpensive to purchase. You are purchasing insurance based on the cost of your possessions, nothing else. Most companies have policies which can be purchased for less than $200 per year, often as little as $10 or $12 a month. And like auto and other insurance policies can be paid for monthly. Probably the easiest way to pay for a renters policy is through automatic withdrawal from your checking account. If you have purchased your auto and renters policies from the same company, you typically receive a discount for having multiple lines (policies) with the same company. And you can set up one payment which pays for both policies.

What does a renters policy cover? It covers your personal possessions and those of your family members who live at the same location. This includes clothes, dishes, and other items that every person owns and uses. Some renters policies may cover a small amount of computer equipment, jewelry, and even collectibles. Be sure and check with your agent or company to understand exactly what is covered. Generally items like a substantial amount of computer equipment, including, programs can be covered with the purchase of a rider to the policy. Like the basic policy, riders are relatively inexpensive with the price being determined by the cost of the goods or value of the material being covered. Riders are available for computers, jewelry, antiques, collectibles, and most other high cost items that not everyone will have. Typically for a jewelry, antique, collectible, and some other riders you will need to have the items appraised. You will be required to find and pay the appraiser