When you own a duplex, getting the right insurance policy is important to keep your investment safe. You need to have the right duplex property coverages.
Real estate often means playing the long game, but one disaster could wipe your earnings in a snap.
Sufficient dwelling coverage for a duplex will keep you above water when a physical disaster strikes your duplex.
This guide will walk you through the essentials of a duplex insurance policy. Whether you’re already a seasoned real estate investor or a newcomer to the industry, this guide is for you.
On a side note, regarding the right insurance policy, you might be interested in our review of Obie duplex insurance.
Here’s a neat trivia for you. Did you know that Milwaukee has the highest proportion of duplex housing in the country? 20.6% of Milwaukee’s occupied housing units are duplex units.
Short Summary
- A duplex insurance policy is a specialized insurance policy that goes beyond standard homeowners insurance to include coverage for risks associated with renting.
- A duplex insurance policy protects landlords from financial losses due to tenant-caused damage, loss of rental income (if a unit becomes uninhabitable), and liability claims from tenant injuries.
- There are different types of coverage In duplex insurance. Property damage protection, liability coverage, loss of rental income, and additional living expense coverage are some of them.
- Homeowners insurance is only suitable for owner-occupied units, not for rented units.
- Landlord insurance is good for duplex owners who rent out their units.
- There are three types of landlord insurance for duplex owners: DP-1 (basic, limited coverage), DP-2 (broader coverage), and DP-3 (most comprehensive, recommended for duplex owners.
- One good way to Lower Premiums on Your Duplex Insurance Policy is to bundle insurance policies.
What Is A Duplex Insurance Policy
A duplex insurance policy is a specialized package designed to protect both units of a duplex property. It often includes coverage for both owner-occupied and rental scenarios.
From our experience, people think of duplex insurance as little more than standard homeowners insurance. There’s more to it than that. For one, standard homeowner’s insurance often doesn’t cover the risks of renting out a property.
Why Is A Duplex Insurance Policy Important
A duplex insurance policy is vital. It protects the landlord from various risks. Renting out a duplex can be a rewarding investment, but you must be ready for some challenges.
Here are a few scenarios where having the right insurance coverage can protect you big time:
- Tenant-Caused Damage: Even with careful tenant screening, accidents happen. Tenants can unintentionally cause significant damage to the property. Think of an overflowing bathtub or a kitchen fire. Duplex insurance helps cover the cost of repairs, ensuring the investment remains protected.
- Loss of Rental Income: If a covered event makes a unit uninhabitable, the landlord may lose rental income while repairs are underway. Duplex insurance with loss of rental income coverage can help replace that lost income.
- Liability Claims: If a tenant gets injured on the duplex (due to an unforeseen hazard), the landlord could be held liable. Duplex insurance with enough liability coverage can protect the landlord from a lawsuit.
Types of Coverage In Duplex Insurance
If you’re about to purchase duplex insurance, you need to understand its coverage types. There are four main ones.
We recommend landlords focus on four types of insurance coverage: property damage, liability, loss of rental income, and additional living expenses.
Remember, you need adequate protection to keep your investment/s safe.
Property Damage Protection
This is the foundation of your duplex insurance. It covers the physical structure of your property against a wide range of perils (fire, storms, and vandalism).
A duplex insurance policy may cover unexpected events like a runaway truck crashing into your property.
This coverage ensures you can repair or rebuild your duplex after a covered event.
Liability Coverage
As a landlord, you must keep a safe environment for your tenants (and guests).
Liability coverage protects you from lawsuits when someone gets injured on your property. It covers legal fees, medical expenses, and potential settlements.
Don’t underestimate the importance of this coverage. A minor incident can result in a costly lawsuit.
Loss of Rental Income
Loss of rental income coverage is a necessity for duplex owners. Even more so when you have mortgage payments and other expenses to take care of.
If a covered event (fire, hail, wind, etc.) makes a unit uninhabitable, the tenants must move while someone repairs the duplex.
Loss of rental income coverage pays you for lost rent. The insurance company will pay you the rent you would have received from the tenants.
Additional Living Expenses Coverage
Additional living expenses coverage is almost the same as loss of rental income coverage. Only landlords who live in one of their rental units need this type of coverage.
The main difference is that additional expense coverage focuses on temporary living costs, not lost rent income.
It provides a financial cushion while your home is being repaired after a covered loss.
How The Different Types of Duplex Coverage Work Together
The four types of duplex coverage work together to protect your investment.
By understanding them, you can ensure you’ll have the right insurance policy to safeguard your duplex.
Comparison Of Duplex Insurance Policy Other Property Insurance
There are four main types of property insurance types.
| Property Insurance | Suitability for Duplexes |
| Homeowners insurance | Homeowners insurance is only suitable for the unit that the landlord lives in. |
| Landlord insurance | Landlord insurance is suitable for duplex owners who rent out their units |
| Condo insurance | Condo insurance is not designed for duplexes. |
| Mobile home insurance | Mobile home insurance is also not made for duplexes. |
Remember, homeowners insurance falls short if there are tenants.
Homeowners insurance primarily focuses on protecting the owner-occupant’s personal belongings and liability. It does not cover the complexities of a rental situation.
Landlord Insurance Policy Types for Duplex Owners
There are three landlord insurance policies, and only one is best for duplex owners.
DP-1 (Dwelling Fire Form 1)
This is the most basic and affordable type of landlord insurance. It covers a few named perils, like fire, lightning, and internal explosions. This limited coverage is less suitable for duplex owners. Duplex owners need more comprehensive protection.
DP-2 (Dwelling Fire Form 2)
This offers broader coverage than a DP-1. It includes more named perils, like windstorms, hail, and vandalism. While better than a DP-1, it still falls short of the comprehensive protection offered by a DP-3.
DP-3 (Dwelling Fire Form 3)
This is the most comprehensive and recommended option for duplex owners. It provides open perils coverage for the dwelling. It covers damage from any peril unless excluded by the policy.
This broad protection allows for customizations like a loss of rental income endorsement. This makes it the ideal choice for duplex owners seeking peace of mind.
Expert Tips for Lower Premiums on Your Duplex Insurance Policy
From our experience, landlords often get lower duplex insurance premiums if they follow these tips.
1. Bundle Your Policies
Most insurance companies offer discounts if you bundle many policies with them.
Try bundling your duplex insurance, auto insurance, or other property insurance together. This can lead to significant savings.
2. Install Security Systems and Safety Features
Enhance the security of your duplex with features like:
- Burglar alarms
- Smoke detectors
- Fire extinguishers
- Carbon monoxide detectors
- Deadbolt locks
- Sprinkler systems
Insurers will sometimes take into account the safety features present in your duplex. The safer your duplex is, the cheaper the premium.
3. Increase Your Deductible Strategically
Your deductible is the amount you pay out-of-pocket before your insurance kicks in. Opting for a higher deductible can lower your premium.
4. Regular Maintenance and Documentation:
Keep your duplex well-maintained and address any repairs promptly. This reduces the likelihood of claims. Additionally, this demonstrates that you are a responsible property manager to the insurer.
Document all maintenance and repairs with receipts and photos. This can be valuable evidence if you need to file a claim. Trust me, we know a lot of landowners who do this diligently.
5. Improve Your Credit Score:
In many states, insurance companies use credit-based insurance scores to assess risk. Improving your credit score can lead to lower insurance premiums.
6. Ask About Discounts:
Inquire about other potential discounts, such as:
- Claims-free discounts
- New construction discounts
- Non-smoking discounts
- Senior citizen discounts
- Loyalty discounts for staying with the same insurer
7. Shop Around and Compare Quotes:
Don’t settle for the first policy you find. Get quotes from multiple insurance companies to compare coverage and premiums.
An independent insurance agent can help you with this process.
8. Consider a Longer Policy Term:
Some insurers offer discounts for choosing a longer policy term, such as a two-year or three-year policy instead of an annual one.
9. Choose Your Tenants Carefully:
Thoroughly screen potential tenants to minimize the risk of damage or liability claims.
10. Install Security Cameras:
Visible security cameras can deter potential burglars and vandals. This reduces the risk of property damage claims.
Wrapping Up Our Experience With Duplex Insurance Policies
Your duplex is a valuable real estate investment and must be protected with the right property insurance.
We recommend getting a DP-3 as a duplex insurance policy. It gives the right coverage for any challenge a duplex owner might encounter.
Lastly, follow our expert saving tips to get the best premiums on your duplex insurance.
Frequently Asked Questions
What Is Property Insurance?
Property insurance is a type of insurance that protects property owners from financial losses when a covered event occurs. Covered events could include fires, floods, vandalism, wind, and smoke damage.
Is Property Insurance Legally Required?
No, property insurance is not legally required in most states (if not all). However, it is often required by mortgage lenders if you have a mortgage on your property. It’s often a good idea to get property insurance.
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