Habitational insurance is a specialist type of insurance blending together multiple aspects of home and business insurance. There are 48.5 million rental units in the U.S. today, and each of these landlords can benefit from this type of comprehensive insurance policy.
While all landlords can benefit, habitational insurance is designed to cater mainly to commercial apartments, such as hotels, timeshares, apartment complexes and student dormitories.
How Does Habitational Insurance Work?
Habitational insurance is designed to offer comprehensive coverage for landlords who own commercial residential properties. Policies are customizable, and therefore landlords can choose to add the coverage they feel necessary to protect their investments.
With 74.4% of rental properties in the U.S. owned by individual investors and the average American income becoming more stretched, taking out habitational insurance is a wise decision.
The average policy will include coverage for the property, liability, excess and environmental-impairment liability. This policy also enables landlords to protect personal property inside the dwelling, which is typically not covered by conventional landlord insurance.
Types of Habitational Insurance Coverage
The primary benefit of obtaining insurance is the customizability of the policy itself. Every landlord can add on the coverage which will cover practically any risk, including damage linked to terrorism.
Habitational insurance also covers loss of income in all circumstances. If rental income is disrupted due to ongoing repairs or replacement of critical aspects of the dwelling, this policy will account for that lost income.
Certain types of habitational insurance coverage come as standard with every policy.
General Liability
General liability coverage will protect a landlord in the event a tenant or visitor is injured on the property. This is particularly important with larger commercial buildings, where the risk of an accident is heightened.
Habitational insurance’s general liability coverage will cover medical bills, legal fees and settlements a landlord may need to face if an injury occurs.
Natural Disaster Coverage
Wind, fire, storm and flood damage are all potential risks for any commercial property. Natural disaster coverage will account for the costs associated with cleaning up after a serious weather event and any reconstruction costs.
Standard coverage may not automatically cover damage from earthquakes, but this can be purchased as an additional add-on.
Vandalism and Theft Coverage
The majority of landlord insurance policies do not cover damage caused by vandalism. Extensive vandalism can cost thousands of dollars to repair, but with habitational insurance coverage, these costs may be recouped through the policy.
Theft is also covered, which will apply to both personal property owned by the landlord and the personal effects of both tenants and visitors.
Equipment Breakdowns
The functionality of a property relies on the dwelling’s facilities working as promised. Habitational insurance will cover the breakdown of any essential equipment, whether this occurs through a natural disaster or willful damage.
For example, if a dwelling’s HVAC system experiences problems, insurance will cover the full cost of repair and replacement.
Environmental Cleanup
Pollution exposure could lead to financial loss as a result of any necessary cleanup operations the landlord is responsible for and third-party liability.
Habitational insurance will include environmental cleanup coverage as standard. Environmental cleanup coverage will cover medical bills, settlements and legal fees.
Additional Add-Ons
Every insurance policy is unique, which is why landlords should speak to a specialist insurance broker to discuss the needs of their rental properties.
Additional add-ons will take into account the challenges and risks posed by a specific locality.
For example, a landlord with investments in California may need to consider earthquake coverage. Landlords with properties near commercial ports and industrial zones may need to consider additional explosion coverage.
The malleability of this type of coverage is what makes it such a strong tool for protecting the future of a landlord’s property investment.
Who Needs Habitational Insurance?
The concept of habitational insurance is aimed at commercial-residential property owners. This is because the more tenants a landlord has the more valuable coverage becomes.
However, contrary to popular belief, anyone who owns a rental property can benefit from taking out this type of coverage.
Habitational insurance provides coverage not found in ordinary landlord and business insurance policies, such as environmental cleanup coverage.
Landlords should consider the benefits of habitational coverage even if they exclusively own single-dwelling homes.
The fact habitational insurance is more comprehensive than standard landlord insurance means investors are protected against a wider range of potential risks.
Speak to an Experienced Personal Insurance Agency
Habitational insurance is mainly aimed at commercial-residential properties with a substantial number of tenants. All landlords have the capacity to take advantage of habitational coverage.
Speak to a professional insurance broker with experience in dealing with the unique concerns of landlords based in the U.S. Get in touch with the Merchant Family Agency to find out more about the benefits of habitational insurance through a free consultation.