Tips on Making Sure Your Rental Property is Protected

by Jacqui Zuzgo 05/16/2021


 Photo by Tumisu via Pixabay

Before renting out a multi-family property, you should take steps to protect yourself from personal liability if anything were to happen. Without the right protections in place, you could end up on the hook for damages caused by fires, crimes and more ­– even if you did not cause the situation yourself. Thankfully, there are a few smart steps you can take to minimize the risks.  

Create An LLC

If any disasters come your way while renting out your multi-family property, your tenants or other affected individuals can file a lawsuit and go after your personal assets to cover their damages. By creating an LLC, you effectively prevent the courts from going after your personal assets, limiting them to your business assets alone.

In addition to setting up your business structure in this manner, you must avoid piercing the corporate veil or the court could ignore your LLC designation. To avoid that scenario, make sure to open separate bank accounts and keep all your assets clearly separated.

Set Up An Insurance Policy

Beyond setting up an LLC, you need a good business insurance policy designed for owners of multi-family properties. Your insurance company will tailor your coverage to your expectations, providing protection from a variety of risks. At the very least, consider including these three levels of coverage:

Liability

With general liability insurance, you are covered if anyone gets hurt or suffers other damages while using the common areas in your buildings, such as:

  • Swimming pool
  • Hallways
  • Laundry facilities
  • Parking lot
  • Fitness center

Depending on the situation, your insurance company will pay for their bodily injury or property damage claims, protecting your business from a lawsuit.

Property

Fires, floods and other disasters are only covered if you add property damage coverage to your policy. Your insurance company will pay to have structural damage repaired and even replace items damaged in the office during the unforeseen event.

Crime

If criminals cause damage to your property or steal from your business, then crime insurance can help minimize your losses. The types of crimes covered by this type of coverage include:

  • Vandalism
  • Robbery
  • Forgery
  • Fraud
  • Theft

Depending on the insurance company’s rules, you may need to file a police report before making your claim.

No matter what level of coverage you choose, your insurance policy does not cover your renters’ belongings. For that reason, you should encourage them to set up their own coverage through their company of choice.

Add Umbrella Insurance

If you accidentally pierce the corporate veil or simply exceed your insurance coverage limits for the year, your personal assets will once again be on the line in the event of a lawsuit. For an additional level of protection, sign up for an umbrella insurance policy. By paying just a few hundred dollars a year, you can get over a million dollars in coverage for liability, property damage and other costly events.

By taking these steps, you will have the protection you need to start renting out your multi-family property without worry. If anything goes awry, you can trust that the steps you took in the beginning will go a long way in minimizing your personal liability.  

About the Author
Author

Jacqui Zuzgo

I have been a REALTOR® in Massachusetts since 1984 and hold both a salesman and broker license. I am currently affiliated with Five College REALTORS® located at 190 University Drive, Amherst, MA. Over my career, I have consistently been a Top Producer in the Pioneer Valley and have gained a reputation for being a strong-minded, no-nonsense negotiator in the industry. I also frequently rank highly on Boston’s Top 20 for sales in Western Massachusetts. Some of my best qualities include my listening and communication skills. I have time and again proven to work well under pressure with exceptional attention to detail. My commitment to my clients and professionalism is obvious in every transaction.

Representing both buyers and sellers in Hampshire and Franklin Counties, as well as assisting in relocations throughout the United States and globally has helped me embrace the need for quality performance and develop an acute and sincere sensitivity to people's needs. Honing in on what matters most is almost a sixth sense. Communication and awareness of the situation at hand produce a final result that has undoubtedly led to the large referral business I maintain.

Education has been a theme throughout my 30 years of experience. Well versed in technology and holding key designations have proven to be assets to my performance and dedication to the Real Estate field. My never-ending enthusiasm, availability, knowledge and drive make for a seamless transaction every client, every time.

I am a native of the Pioneer Valley. I am committed to sharing all the area has to offer in making your transition, whether long distance or short, a satisfying experience.

Education:

  • University of Massachusetts, Amherst - Bachelor of Science 1983
  • Top Individual Seller for Residential Sales in the Pioneer Valley since 2006.
  • #1#1 Realtor in the entire Franklin/Hampshire Counties for Millions Sold since 1999.
  • Highest producer in sales since 2004 in Franklin/Hampshire Counties.
  • ABR®– Accredited Buyer's Representative
  • CRS – Certified Residential Specialist (only 3% of REALTORS® hold a CRS)
  • e-PRO – Digital Marketing, Certified e-PRO Realtor®
  • GRI – Graduate, Realtors® Institute
  • SRES– Seniors Real Estate Specialist®

Biographical Highlights:

Life long, active member of the community, born & raised in the Pioneer Valley. Graduate of University of Massachusetts, Amherst, BS 1983.

Current Committee Involvement:

Member of the local Chamber of Commerce - Post Board of Director's member Volunteer for the Road to Recovery.

Greenfield Community College Foundation Board Member 

Greenfield Savings Bank Corporator

MLS Professional Standards Committee Member

Have a question for Jacqui? Jacqui's email: [email protected]