Property insurance is vital. It protects against the threat of fire, wind, and more. It also covers other things, such as expensive appliances that might be damaged in a covered event. That protection is essential for lenders and property investors, but it can be challenging to secure. Real estate owned insurance for Colorado property investors can offer the benefits needed.
What Is Real Estate Owned Insurance?
Real estate owned insurance is available to both real estate investors and lenders. It provides a way to protect a property from threats separate from homeowner’s insurance. It may also be called landlord protection insurance or tenant occupied insurance.
While landlord protection insurance in Colorado helps offset risk, it is not a one-size-fits-all solution. Like other types of insurance, landlord protection insurance in Denver should be customized to the investor/property owner’s unique needs, goals, and budget. Property investors will find several different levels of coverage available, including:
- Basic Dwelling Property Insurance – This is the bottom-most level and offers protection for the structure itself, as well as limited contents, such as appliances and other landlord-owned items. It usually does not cover other structures and only protects against a limited list of named perils through cash-value reimbursement.
- Broad Dwelling Property Insurance – The second tier of tenant-occupied insurance for Denver landlords covers a little more than the base level. Instead of cash-value reimbursement, this level offers replacement-cost reimbursement for named perils. This helps landlords save additional money if forced to file a claim.
- Special Dwelling Property Insurance – The final tier is also the most comprehensive. It offers replacement-cost reimbursement similar to the second tier, but it does not limit reimbursement only to named perils in the policy. This is the better option for investors in need of the most robust protection for their properties.
Typical Coverages within Landlord Protection Insurance in Colorado
While every policy will vary based on a broad range of factors, most policies include specific areas of coverage. These may include the following, although real estate investors are urged to work with their insurance agents to customize their policy to meet their specific needs and expectations.
- Structure – All policies for tenant occupied insurance in Denver offer coverage of the structure itself. Note that structural coverage usually extends to landlord-owned appliances. However, the types of appliances covered will vary from insurer to insurer and policy to policy.
- Liability – Most policies for landlord protection insurance in Colorado should include personal liability coverage that protects the landlord against being sued if a tenant or guest is injured or suffers property damage. However, not all policies include this coverage, and all policies vary in terms of the coverage amount. It may be necessary to add (or increase) this coverage with a rider.
- Landlord-Owned Property – Some landlord protection insurance in Denver covers additional landlord-owned items left at the property, whether for tenant use or other reasons. If appliances are not protected under dwelling coverage, they may be covered here.
- Loss of Income Coverage – Real estate owned insurance in Colorado may cover loss of income if tenants are forced to vacate a property due to a covered event. However, this is not true for all policies and may need to be added as a rider.
The Differences in Coverage with Varying Property Dispositions
Every policy for real estate owned insurance in Colorado is different because each property and situation is different. What’s more, different situations and property dispositions will also affect coverage, and some situations may require additional coverage not included with basic landlord protection insurance for Denver area property investors.
Vacant Home Coverage
This is a good example of a type of coverage that is not often included with basic landlord protection insurance. Rental properties can be vacant for any number of reasons – being in between tenants, for instance. However, vacant properties are also at greater risk of certain types of risks, including break-ins and theft. Vacant home coverage provides protection and peace of mind for property owners who need to file a claim to handle damage or repairs ranging from door repair to replacing broken windows or damaged locks.
Vandalism is a significant risk for rental properties, particularly those that sit vacant for weeks or months. Graffiti is the prime example here. It can cost tens of thousands of dollars to remove or cover over graffitied walls, siding, doors, windows, and other elements in the home. Vandalism protection provides property investors with the knowledge that even if the rental is vandalized, they have recourse available to them.
Unnamed Perils and Uncovered Threats
As mentioned, landlord protection insurance for Denver area property investors can vary dramatically in terms of what the policy actually covers. It is important for property investors/landlords to delve into the named perils and threats, identify any potential threats not named that could endanger their investment, and find protection. For instance, flood insurance is often not included with real estate owned insurance in Colorado and must be purchased as a rider. The same is true for other natural disasters and specific threats. Working with an experienced insurance agent will help ensure that investors/landlords can customize the level of protection they receive from property insurance policies.
Finding the Right Level of Protection
Real estate can be an incredible investment, and rental fees offer a fairly reliable, ongoing stream of income. However, that investment must be protected against threats ranging from fires and floods to vandalism. Real estate owned insurance in Colorado offers the means to achieve that protection, but it is not as simple as purchasing an insurance policy out of the box.
Care must be taken to ensure that the policy fits the investor’s needs and budget, as well as the threats to which the property will be exposed. Ideally, investors will work with a knowledgeable insurance agent to compare offerings from different insurers, discuss various riders, and make an informed decision when it comes to purchasing insurance.