Landlord insurance is essential for anyone who rents out property.
But how much does it cost? That’s the big question.
Fortunately, this article provides answers. We explore how insurers calculate premiums and the factors that influence how much you will ultimately pay. By the end, you should understand what you can afford.
Premium calculation
Premium calculations begin with a thorough property assessment. Insurers inspect structures to determine how much rebuilding will cost in case of serious damage or a fire.
Next, they ask you the amount of coverage you need. Some landlords require more than others, so it is always a personal decision. If you go to an insurance broker, they will give you quotes from assorted carriers. You can use these to determine insurers offering the best risk-reward.
During this process, insurance companies calculate the effect of deductibles (discussed below). Usually, you have a choice of how much you want to contribute to the cost of repairs (should they become necessary).
The last step is to review the policy terms and decide if you are happy with them. If you are, sign on the dotted line.
The average cost is around $1,895 annually. However, you may pay more, depending on your circumstances.
Influencing factors
Numerous behind-the-scenes actors determine the cost of landlord insurance (similar to other insurance policies), including:
- Property Location
Property location is one aspect that can affect insurance costs substantially. Areas prone to natural diseases (like flooding or wildfires) usually command a higher premium than those in safer regions. Other factors, like crime, can also play a role.
- Property Value
The value of the property can also affect the cost of landlord insurance. The costlier it is, the higher the premiums (similar to car insurance).
Multi-family homes and larger developments are at risk of higher costs because of the valuation effect. However, insurers sometimes charge more for older properties if they believe they have a higher risk of damage or liability.
- Deductible
You can occasionally lower your monthly insurance premiums by raising your deductible. The more you are willing to contribute, the lower the perceived risk by the insurer. However, if you make a claim, you have to pay more. And that can increase overall costs.
- Coverage Amount
Coverage amount also affects landlord insurance premiums. The more protection you want, the higher the premium.
For example, expect to pay extra for things like loss of rental income or liability coverage.
- Tenant Type
Lastly, insurance premiums can sometimes vary by tenant type. Insurers often view renting to students and short-term renters as risky because they have reduced incentives to avoid property damage.
By contrast, long-term renters (with professional qualifications) often have lower risk profiles. These individuals are less likely to cause damage, keeping costs down.
Once insurers have these details, they can enter them into the actuarial tables and calculate the risk you pose. Then, they can use this information to calculate a suitable premium.
Contact us to Save on Landlord Insurance
If you are looking for a great price on landlord insurance, contact our team today! As independent brokers, we shop the market to find you the best deal on quality insurance!
So call American Insuring Group today at (610) 775-3848 or contact us online to start saving.
