Should You Choose Investment Property Insurance?

Property investment can be very financially fulfilling, but it can also have its share of pitfalls.  With all the tax and mortgage benefits associated with a property investment, it is no surprise that property investment is also associated with legal skirmishes and entanglements.  Property investments involve a lot of risk factors.  To protect yourself from these types of problems, you need to invest in investment property insurance.

The Benefits of Investment Property Insurance

Why should you consider taking out investment property insurance?  Investment property insurance can cover your losses in case there are problems from your investment property.  Investment property insurance can offer you full coverage in case of natural disasters.  There are many examples of calamities and natural disasters that can be covered by hazard property insurance (also called fire insurance in some areas).

These catastrophes and natural disasters may include fires, falling trees, wind damage, floods, vandalism, and other calamities.  Note that some types of natural disasters require a separate policy or endorsement at additional cost--especially if the property is in a high risk area for that type disaster.  For example, owners must buy a separate policy for earthquake coverage in San Francisco or flood insurance when the property is in a flood plain.  If you do not have investment property insurance, the cost of rebuilding or repairing your property on your own can be nearly impossible.  

Liability insurance protect you against lawsuits due to accidents that occur on your property.  This type of insurance can pay for any awarded damages plus court fees and legal bills.  There are many circumstances in which negligence can cause injury or harm to someone that is in your property's premises.  For example, someone slips and falls on your property or is injured by some defect with the building.

There are basically two different type of investment property insurance. The first is residential investment property insurance.  The second basic type is commercial investment property insurance.  Residential investment property insurance type will usually cover all kinds of residential units.  This may include homes, apartments, tenements, condo units and other similar properties.  On the other hand, commercial investment property insurance will pay for damages on office units, buildings, centers, retail space and other commercial properties.   

Most property insurances will also protect you against loss of the contents of your house--but NOT the contents of your tenants.  This includes protection against lost furnishings and furniture and other property.  Most comprehensive residential investment property insurance policies will also provide you with coverage of associated structures that are located on your property.  These can include swimming pools, barn houses, gazebos, patios, and other prominent structures.