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Umbrella Insurance for Real Estate Investors: Things You Need to Know

Jun 07, 2023

Umbrella Insurance

Umbrella Insurance for Real Estate Investors: Things You Need to Know

Real estate investors face many risks when building new commercial or residential properties. In most cases, their rate of return makes it worth their while, but there are times when the risk doesn't pay off. This can result in a significant financial loss, negatively impacting their future investments. Umbrella insurance can help take the sting out of those losses and allow them to continue to invest in more profitable properties. Investing in real estate is lucrative if you know how to protect yourself.

Common Claims

Common claims associated with real estate properties often have to do with various landlord/tenant issues. This can include tenants that damage property or third-party litigation that involves damages to property caused by the tenant. Vacant properties are common haunts for trespassers. If a trespasser is injured while on the property, they may try to sue the landlord. Poorly maintained properties may also be the subject of lawsuits.

Rule of Thumb

It's essential to know your variables and your different types of risks. Work with a commercial insurance broker to ensure you get the proper umbrella coverage to cover your risks sufficiently. Depending on the type of commercial property you own, you must choose the right umbrella coverage to ensure you are adequately covered.

How It Works?

Umbrella insurance covers any claims that exceed the cap of your traditional policy. Umbrella policies can range from $1 million to $20 million. The amount of an umbrella policy will depend on multiple variables and the type of property you have invested in. When your insurance broker looks at your holdings, they will create an umbrella policy that best suits your needs.

Excess Liability or Umbrella Policy

An excess liability policy only extends the limits of one type of policy. With an umbrella policy, all your policy limits are extended, so you are fully covered. Each property will be covered equally under an umbrella policy if you have multiple properties. Umbrella coverage goes much further than just your general liability policy.

What It Does and Doesn't Cover?

Umbrella policies cover bodily injury, property damage, and contractual liability. Physical injuries and property damage are quite common in certain types of properties. Contractual liabilities involve broken contracts or leases. It also consists in assuming a landlord's tort liability. An umbrella policy will not cover intentional property damage caused by a landlord or personal injury to a landlord. There are specific lines of coverage dedicated to these types of claims.

The Overall Cost

If you are trying to determine the cost of your property, you will have to consider the different variables. They include the value of the property, its location, and its overall value. Your individual needs will also have to be considered. You will need to factor in the amount of the deductible and any prior claims you may have filed.

Contact Us to Get the Best Coverage with Fuller Insurance Agency!

Buying an umbrella policyfor real estate investment coverage will protect you financially. Contact the agents at Fuller Insurance Agency today to learn more about the benefits of this type of policy and how it can help you manage your investments.

 

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