Housing in San Francisco is not cheap. That’s why if you own rental property here, you are undoubtedly concerned about protecting your investment. So what types of insurance coverage do rental property owners need? Nick Scarabosio of Jackson Group Property Management knows San Francisco property management inside and out. Here Scarabosis talks about several insurance issues affecting San Francisco rental property owners.
Owning rental property in San Francisco can be an expensive venture. For a rental property owner, protecting your investment and your source of income are vital parts of successful rental property management. Purchasing the right types of insurance coverage will help ensure that your rental property does not become a financial burden in the event of a catastrophic event or other adverse occurrence.
Just as property insurance is essential for the homeowner, it is also a must for a rental property owner. In fact, I have yet to see a rental property without it, largely due to the fact that most property owners still have a mortgage and most lenders mandate this type of insurance. In addition to acquiring property insurance, however, rental property owners will also benefit from getting a landlord’s policy. In addition to protecting your property from damage, a landlord’s policy is intended to help protect you from legal and personal liability.
Landlord’s policy coverage varies from company to company, but many policies offer rent protection. Rent protection is intended to cover lost income for the landlord in the event of damage to the property that requires tenants to move out. This means, for example, that if there is a fire at your property and your tenants are required to vacate the property during repairs, your insurance company will not only cover the costs of the repairs themselves, but will also cover your lost rental income while repairs are being done. Because most landlords rely upon their rental income as a major source of income and need that income in order to pay the mortgage, this type of insurance is extremely important.
Some landlord’s insurance policies also cover wrongful eviction. In San Francisco in particular, this is important coverage to have. Because rental properties in San Francisco are subject to the city’s strict eviction control rules, it can be difficult for a landlord to get a tenant to leave a rental unit and wrongful eviction cases are common. These cases can become expensive for the property owner, sometimes upwards of $50,000. Wrongful eviction insurance will help cover these expenses for the property owner.
Sadly, no insurance policy can protect a rental property owner in absolutely every situation. For example, many property owners ask us about whether they can purchase an insurance policy to cover bed bugs. Thanks to a rise in international travel and the prohibition of certain chemicals once used to control them, bed bugs are becoming a more serious problem for rental property owners all over the country. Unfortunately, because bed-bug infestations are nearly impossible to prevent, difficult to stop and always expensive to clean up, few if any insurance companies are willing to provide coverage.
In addition to recommending landlords’ policies for rental property owners, at Jackson Group we also try to impress up on our tenants the importance of purchasing renters insurance. In fact, in other cities, it’s not uncommon to require tenants to have insurance. In San Francisco, however, rent control rules prohibit landlords from doing so as such a requirement would amount to increase in rent. Regardless, renters insurance benefits both tenants and property owners alike. Unlike property insurance, renters insurance doesn’t cover damage to the structure of the property. Rather, it simply covers the contents of the structure - those items belonging to the tenant. Some renters insurance policies also include liability coverage for incidents that take place inside a rental unit. This type of policy can help keep down insurance costs for property owners while protecting the tenant from losses and liability.
