Do Landlord Need To Pay For Fire Insurance?
I am leasing my property to another Investor. In his contract he states Landlord shall pay for fire and coverage insurance on the property.
Is this the rule? So this would eat up ito my monthly cashflow then?
Thanks for guidance.
It is typical for the landlord to have this very basic insurance policy.
If you have a financial interest in the property itself (an ownership interest, rents, equity, etc...) make sure you are at best, first named insured. This gives you (or your entity) primary rights to the policy benefits. At worst, ensure you have an additional insured AND loss payee endorsement (similar to how a mortgage company is protected).
As landlord you need to protect the structure of the property, not the possessions inside. So you would need to protect against fire or any other hazard that may damage the structure.
If your property has a mortgage, you have insurance on it. Request your insurance agent to change this policy from a homeowner's policy (I assume this was your primary residence) to a landlord's policy.
Your lender will require that you have a dwelling policy (DP). Even if it doesn't you should care that the place doesn't burn or have a tree fall on it. Your dwelling policy will also contain liability coverage which protects you against suits from third parties. You are only responsible for the property itself, your tenant will have to get insurance for his or her personal belongings.
If its not cash flowing after you take out the policy then you should consider raising the rents, get out of it, or grin and bear it. This is a cost of doing business.
There may need to be a slight correction to jorge's reply.
I work in insurance and a dwelling policy does not generally have liability coverage included, it usually stems from a primary dwelling, the landlord's home. In some cases, this liability cannot be extended to more than four dwellings.