Owning rental properties can be a lucrative investment, but it's not without its challenges. One such challenge that landlords may face is insurance denial. When your insurance provider denies your claim, it can lead to financial strain and stress. In this brief guide, we'll explore the common reasons for insurance denials on rental properties and what you can do to navigate this situation effectively.
Lack of Proper Coverage:
Insurance denial often occurs when landlords fail to secure the right type or level of coverage for their rental properties. Homeowners' insurance typically doesn't cover rental properties, so it's essential to have a dedicated landlord insurance policy that addresses the unique risks associated with rental units. Always consult with your insurance agent to ensure you have the appropriate coverage in place.
Failure to Disclose Information:
Honesty is key when applying for insurance. Failing to disclose relevant information, such as prior claims or the presence of certain risks (e.g., a swimming pool or a trampoline on the property), can lead to insurance denials. Be transparent with your insurer about the rental property's condition and any potential hazards.
Regular maintenance of your rental property is essential not only for the safety and comfort of your tenants but also to keep your insurance policy valid. Insurance companies may deny claims if they find that damages were a result of negligence or lack of proper upkeep. Keep records of maintenance and repairs to demonstrate your commitment to property upkeep.
Tenant-related issues, such as illegal activities or non-compliance with lease terms, can lead to insurance denials. Ensure your lease agreements are well-drafted and enforceable, and conduct thorough tenant screening to mitigate these risks. Document any violations and address them promptly.
Understanding the policy exclusions is crucial. Insurance policies typically exclude certain perils, such as floods, earthquakes, or acts of terrorism. Consider adding riders or separate policies to cover these specific risks if your rental property is located in an area prone to such events.
What to Do if Your Claim Is Denied:
If your insurance claim for your rental property is denied, don't panic. Here's what you can do:
- Contact The Voss Law Firm: If the appeal process doesn't yield favorable results, consider consulting an attorney who specializes in insurance law to explore your options.
- Review Your Policy: Carefully go through your insurance policy to understand why the claim was denied.
- Appeal the Decision: If you believe the denial is unjustified, you can appeal the decision with your insurance provider. Provide any additional documentation or information that may support your case.
- Mitigate Further Risks: To prevent future denials, take steps to address the reasons for the denial, whether it's obtaining proper coverage, improving maintenance, or addressing tenant issues.
By understanding the common reasons for denials and taking proactive steps to prevent them, you can better protect your investment and navigate insurance-related issues with confidence.
Always consult with insurance professionals and legal experts when needed to ensure you're making informed decisions for your rental property.
At the Voss Law Firm we strive to help you get back to normal as fast as possible after an insurance denial or “low ball” offer. If you feel you have been unfairly treated by your insurance company, please call (888) 296-1986, input your information for a Free Claim Review or chat with us today.