Protecting your rental property top to bottom

4 minutes

Owning a rental property means facing a range of risks. And it’s not just on you, your tenants also play a role too. Over-insuring is costly, under-insuring is dangerous so the key is striking the right balance.

Let’s break down what every property owner should know to stay fully protected!

Home insurance or commercial insurance?

Buildings with fewer than seven units are typically covered under a standard home insurance policy. Seven or more units? That’s where commercial insurance coverage comes in.

Does the difference really matter? Yes, and here’s why:

  • It helps to understand your coverage. For example, a commercial insurance policy offers fewer protections for water damage than a standard home insurance plan.
  • It offers options to reduce your costs by tailoring your coverage. For larger buildings, insurers (including Beneva) look at even more factors when setting your insurance premium. The good news? You can influence many of these factors like installing safety features such as a monitored fire alarm system or water leak detectors.

Top coverage essentials for your rental property

Insuring a large rental building starts with a solid risk assessment, a step you’ll take hand in hand with your insurer.

Here’s what should be at the top of your checklist:

  • Insure the building and its contents against fire, sewer backup, flooding, and more.
  • Cover your liability in case a visitor or tenant gets injured inside the building or outside, i.e. icy, slippery parking lot.
  • Safeguard your revenue by covering potential loss of rental income if your units become uninhabitable after a covered event.

Additional coverage worth considering

Seasoned property owners know that surprises happen. That’s why adding some extra coverage can make all the difference:

  • Legal access in case of a dispute with a tenant.
  • Cyberattacks can lead to unexpected costs, lost income, and even lawsuits.

Smart tips to keep your coverage current

Are you sure you’re insuring your property for its current value?

Our in-house experts agree that you should have your rental property professionally appraised. That way, you’ll know if you’re fully covered in case of a total loss.

To protect your assets, review your coverage regularly. Property values can change for many reasons. For example, if you start including appliances or furniture in your units, you’ll likely need to insure them.

And don’t forget to inform your insurer about major renovations or changes in how a space is used. Turning a room in your 24-unit building into a gym? That kind of change means it’s time to review your insurance.

Protecting your property is essential, but don’t forget your tenants. They need coverage for their belongings and liability as well. Another smart move is to require proof of insurance in the lease, which is a simple way to reduce risk.

Real-life example

Steve has owned multi-unit buildings for over 30 years. One New Year’s Day stands out:

“I had just walked into a family party when I got a call about major water damage. Two students renting one of my units had turned off the heat before leaving for the holidays. While they were away, the pipes froze and burst. The restaurant on the ground floor ended up with a foot of water.”

“The damage to a neighbouring unit and the restaurant added up to over $100,000 at the time. The students’ parent’s home insurance ultimately covered the loss.”

Steve’s takeaway:

“That was a wake-up call. Now, I always require proof of insurance before renting or renewing a lease. My coverage alone can’t cover everything. Tenant coverage is essential for their security and everyone’s peace of mind.”

Complete peace of mind

Taking out comprehensive coverage means zero guesswork: your building and your tenants are protected. It helps you stay ahead of surprises and protect the value of your investment.

Want to make sure nothing slips through the cracks? Speak to one of our certified commercial insurance advisors. Together, you’ll review your needs and build a plan that’s tailored to your needs.

Looking for more expert risk management tips?

Check out this episode of our Ask the experts podcast which is packed with practical advice and real-life stories for property investors and those who want to become one.

Enjoy the podcast!