You’ll want to do everything you can to protect your investment property, and it starts with insurance. 

Insurance needs to be a part of every San Jose investor’s risk management plan. The uncertainty of our personal property and economic stability has been more apparent than ever, as we emerge from a few intense years of pandemics, wildfires, floods, and general uncertainty throughout the world and particularly in California. 

Whether you’re renting out one property or an entire portfolio of properties, you know that those assets are worth a lot of money. Make sure you’re investing in the right insurance policies and the most comprehensive coverage. 

For new investors or first-time landlords, insurance can be confusing, especially if you’re renting out a home that you once lived in yourself. That’s why we’re here to help. We aren’t insurance agents, but we are San Jose property managers, and we work with owners all the time to ensure they’re covered in case of a worst-case-scenario.

As you’re evaluating and updating your insurance coverage, there are a few key things to consider.

Understanding Homeowner vs. Landlord Insurance 

Homeowner insurance will not cover you sufficiently when you’re renting out a property. If you once lived in the home that you’re now leasing to tenants, make sure you convert that homeowner policy to a landlord policy. This is important because if you don’t do it, and you file a claim, you may find out the hard way that your policy doesn’t cover that claim. 

The insurance you buy as an owner/occupant will cover you and your property and your personal possessions, but when you no longer live in the home, the coverage changes. Make sure you speak to your agent or your insurance company to make this change. You no longer need a homeowner policy; you need landlord coverage.

A good landlord policy will cover your dwelling and provide liability protection. The dwelling coverage will pay to rebuild or replace your home in the event of a loss. Other structures on your property will also be covered, such as fences, garages, or storage sheds. The liability portion of this policy is essential because you’ll need to be covered if your tenant or a tenant’s guest gets hurt while at your property. 

Loss of Rent Insurance for San Jose Rental Property

Depending on the type of policy you buy, there may be loss of rent coverage. If there’s not, make sure you add it. You need loss of rent coverage when you’re insuring your San Jose rental property. 

If your tenants need to move out of the property because it’s inhabitable or requires a major repair, you want to make sure you don’t lose any rental income. No one likes to imagine things like fires and floods, but if there’s a major incident that really damages your home, you’ll require some serious renovations. This could lead to relocating your tenants, and that means you may not be collecting rent. Having coverage for lost rental income will save you from an even larger loss.   

Be Complete: Consider Additional Insurance Protection

Most insurance policies cover dwelling and liability and maybe loss of rent. 

There are additional coverage options that can be advantageous as you seek to protect your investment. For example:

• Insuring yourself for building code upgrades may be worth the low increase to your premium. If you need to repair or replace your home, you might find that the building codes have changed since your home was first built 20 or 30 or 50 years ago. To upgrade the plumbing, the wiring, or the air ducts in your rental home, you’ll face costs that are much higher than you may have anticipated when you bought the property. You’ll be covered for those increased costs with building code coverage. 

• Vacancy. If your rental property is going to be vacant for a while during repairs or renovations, you might need to buy extra insurance to protect it until it becomes habitable. Many investors are choosing insurance to protect them against things like bed bugs.

When it comes to insurance protection, more is almost always better. 

Earthquake Insurance and San Jose Rental Homes

No one likes to even say the word “earthquake” in California, but they’re always a threat. We never see them coming, and we always wish we had insurance coverage after they hit. A general landlord policy won’t cover earthquakes, and you need to know what kind of coverage is available, and what it can actually do for you.

If there’s fire damage to your rental property that’s caused by an earthquake, your landlord policy is required to cover it. However, other damage to your home from an earthquake is not covered by your landlord policy. 

Oddly, earthquake coverage is not required in California. It is, however, probably a good idea for rental property owners. Especially in San Jose. 

Earthquake coverage can provide some security, especially if you own a building with several units. There’s always potential for earthquake damage, and if it’s major damage, tenants will need to move out while repairs are made. You’ll have to rebuild, and you want to know there’s insurance in place to help you do that. 

Always Require Renter’s Insurance from San Jose Residents