Anyone familiar with "landlord insurance" that insures against loss of income due to vacancy or eviction?
Heard about it on an investment webinar as being a feature they offered to protect the revenue stream of the investment, but have been unable to find any providers, costs, etc.
I've not heard of it. USAA offers it (income replacement) with my regular policies that I have for my rentals, although I don't remember the particulars. I should probably re-familiarize myself with that, now that you mention it.
@Bob Lowry I am 99.9999% sure that product does not exist. You can not insure an investment or business venture against slow/no business.
To apply it to a different industry, Starbucks can not say, I want to insure 1000 people come in to each location everyday. Then file a claim that only 800 came in.
This is the inherent risk in being in business.
if this is real it sounds amazing and there prob is but I'm sure there's a catch maybe a portion of rent when prop is leased maybe a monthly fee
No such thing. That's the risk of business and the importance of having reserves
Affinity Group does a lot of these insurance policies. The option for loss of income is quite expensive, we have found that it wasn't worth the cost.
Here is the website for the company: www.affinitygm.com
Just an FYI:
Affinity group specializes in Landlord policies, they offer a wide range of options that you can choose from. Actually, there are quite a few companies out there that offer the same type of coverage. We have moved on from Affinity (with whom we were for over 8 years) to Berkshire Hathaway. Berkshire Hathaway offers a more thorough policy, that covers a lot more, with lower deductibles and better coverage. The Loss of Income provision is also available.
Aon used to offer a product called Rent Protect, but I'm not sure they offer it anymore. Their policy was actually for the purpose of protecting landlords from tenants who simply didn't pay and also had a limit to cover eviction costs as well. I'm guessing that if they don't offer it now it's because it was a product that couldn't support itself... not enough premium dollars going into the bucket to support all the payouts...
You can get loss of rents coverage for a fairly low cost typically but loss of rents would only come into play as an additional coverage if you have a covered loss. For example, if you have a fire and have to move your tenant out because the property becomes uninhabitable.
Putting my loss prevention hat on, this is really where thorough tenant screening comes into play. I know that you can't catch them all, but working on your screening process and detective skills will net you far more valuable rewards than insurance dollars. Lovely philosophical answer right? Point being, treat the disease not just the symptom... there could be a number of underlying causes behind why consistent tenant placement is an issue, from the area in which one is investing to a missing piece of the tenant placement process. Insurance is great and part of your risk management plan, but it shouldn't be your foundation. My two cents... :)
Loss of rents as you are referring to in your statement is "Triggered" by a claim of a covered peril (wind/fire, etc) on your policy. It sounds like @Bob Lowry is asking for a coverage when the landlord evicts. In this case, Eviction is not a covered peril.
I have found it to be $4-$5 per month to cover $10,000 in annual rental income. not to mention, many of the new financing programs out there, some advertising here on BP, require Loss of Rents on the policy to be in compliance with the loan.
Disclosure - I represent Affinity, Berkshire and 50 other carriers, so I feel I have good perspective as to what the industry is offering. The cost for Loss of Rents varies greatly from company to company and state to state. I encourage all landlords to at least investigate the cost.
@Jason Bott. Hi Jason, thank you for the additional information. All the agencies I have spoken with here in Atlanta charge much higher rates. I don't know if it's the Atlanta market here, but our prices were around $20 per thousand, which is much higher then the rates you have mentioned. Is it possible that prices vary that much based on market area?
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