As property owners know, unexpected costs can quickly destroy hard-earned rental profits. Who doesn’t dread the midnight call from a panicked tenant about a pipe leaking – or something worse? The key to protecting profits and a good night’s sleep is having the correct rental property insurance coverage.

Smart investors think of landlord insurance not as protecting their property, but as protecting their income. Why? Because damaged property can always be repaired, but income lost is lost forever.

Each rental property has unique insurance needs. For instance, a home at the beach requires different coverage than a condominium in the city. While it’s best to consult with your insurance agent to customize a policy for your specific needs, we’ve put together some information to help explain the basics.

• Landlord insurance, also known as a Dwelling Fire Policy, protects you from property loss or a liability lawsuit. Your policy should cover the entire home and other structures, such as detached sheds or garages, from damage caused by fire, lightning strikes, wind, hail, explosions and smoke. The policy’s liability provisions usually include coverage for accidental injury of your tenants or their guests. As a property investor, you’ll want to think carefully about the deductibles, coverage limits and your ability to handle costs that are not covered by your insurance, should an incident occur.

• Add-on policies provide you with extra protection. Other insurance policies can often be bundled with your landlord insurance. For instance, do you want to protect kitchen appliances from damage caused by fire and other perils? If you are renting the home furnished, do you want insurance for your furniture? There are also personal umbrella policies, which provide higher liability protection—generally starting at $1 million.

• Ask your agent what else you need. If you live near the beach, you might need flood insurance, which must be purchased separate from your landlord policy. Your insurance agent can advise you of what additional coverage you should consider.

Remember, rental property insurance should be uniquely crafted to your properties, your needs and your profits. It’s a good idea to review your policies once a year to ensure you have adequate coverage, and your insurance agent can help you to do so. For additional assistance, or to get a competitive quote, the team at Long & Foster Insurance can be reached at 1-866-275-4534.