Is it worth having homeowners insurance for a rental property?
Is it worth having homeowners insurance for a rental property? One of the most advantageous businesses is to acquire a commercial property and rent it to the person or company that wishes to exploit it. “There is no need to buy raw materials or deal with customers every day. It is enough to wait for the money to fall into the account every month.” So did Roberto, who spent all his savings buying an old warehouse in Homestead. He divided it into three and rented it to three companies that use it as warehouses.
“I have done the business of my life”, Roberto could be heard saying, happy with his investment. “Each company pays me enough money to recover everything invested in five years,” he said, listing the following businesses that he intended to undertake.
Everything was going great until last week a fire broke out that devoured the entire structure. Luckily, the incident happened at dawn and there were no human losses. Each company recovered the losses since their insurers took care of the damages. However, Roberto is facing damages claims from two of the companies. Unfortunately, he currently does not have enough money to face the legal demands, much less to repair his warehouse.
Roberto regrets that he refused to buy insurance for the building, thinking that it was enough for each tenant to have his own insurance.
Although having commercial premises owner’s insurance is not mandatory, it is advisable to acquire it to protect the property from the potential risks it may suffer, whether due to hurricanes or fire. In addition, it is also convenient to purchase a civil liability policy to cover the damages that the structure may cause to people or the property of third parties, including tenants.
If Roberto had been more careful, this fire would be just an unpleasant anecdote in his experience as an entrepreneur and not the beginning of a tremendous ordeal of payments, legal demands, and the end of a comfortable business. Is it worth having homeowners insurance for a rental property?
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