5 Questions to Gauge Your Risk Tolerance Before Getting Landlord Insurance

2. Am I Prepared for a Worst-Case Scenario?

While minor maintenance issues are common, a worst-case scenario—such as a fire, flood, or significant liability claim—can be financially devastating without adequate coverage. 

Consider this:

• Can you cover tens of thousands of dollars in damages without insurance stepping in?
• Could you handle the lost rental income if your property becomes unlivable for months?

A good policy protects you from catastrophic losses, ensuring your investment remains financially viable even in extreme situations. You need to thoroughly understand your policy and what is covered precisely under it. 

3. How Comfortable Am I With Higher Deductibles?

One of the easiest ways to lower your insurance premiums is to choose a higher deductible, meaning you take on more financial responsibility before insurance coverage kicks in. This approach makes sense if you:

• Have a high tolerance for risk and prefer to self-insure for minor issues.
• Want to reserve insurance for catastrophic events rather than routine maintenance.
• Have enough savings or a dedicated reserve fund to cover unexpected expenses.

This strategy allows landlords to save on premiums while ensuring protection for significant, unexpected losses.

4. What Risks Are Unique to My Property?

Every rental property has different risks based on location, tenant type, and property condition. Understanding these risks helps you decide on coverage levels. 

Here’s what to consider:

• Is your property in a flood-prone area? You may need additional flood insurance.
• Do you allow pets? A strong liability policy is essential.
• Do you rent to short-term tenants? Different policies may be required compared to long-term rentals.

Assessing the risks tied to your property ensures that your coverage matches your exposure, rather than just selecting a generic policy.

5. How Often Do I Plan to File Claims?

Insurance is designed for significant issues, not routine repairs. Too many claims can lead to:

• Higher premiums or policy cancellations.
• Denials for future coverage if insurers see you as high-risk.
• Financial losses over time, as small claims may not be worth the deductible and potential premium increases.

If you only plan to file claims for significant losses, a higher-deductible, lower-premium approach may make more financial sense.

Find the Right Balance Between Coverage and Self-Insurance

Landlord insurance should protect your investment without overpaying for unnecessary coverage. You can select a policy that aligns with your strategy by evaluating your risk tolerance, financial situation, and unique property risks.

If you are ready to explore options tailored to your needs, Steadily offers landlord insurance designed for savvy investors. Get a quote today and ensure your rental is protected in the way that best fits your financial goals.