Many people say that the only way to buy cheap landlord insurance is not to buy insurance at all. When you rent your property to generate passive income, it is foolish to think that no protection is needed. With careful consideration, it is possible to buy cheap insurance irrespective of the property you own. You have affordable insurance that is just enough to cover your losses. Different types of policies are provided by insurance companies for residential and commercial rental properties.

Comparison shopping is often ignored by many landlords mainly because they have to go through various quotes. However, if you are ready to spend a few hours comparing quotes, it can result in incredible savings. The same policy with similar covers will be sold at different costs by different insurance companies. While comparing policies, compare based on the price, covers, and claims. Don't fall for the cheapest insurance policy because when you have to make claims, the covers become very important.

Understanding what is covered by your policy is important. You can buy minimal coverage that is just required to protect your property in case of major loss caused by natural calamities. Named peril policy lists types of losses covered and provides protection only against those types. Comprehensive policy on the other hand provides ultimate cover against all risks except for those situations clearly excluded. Named peril policy is cheaper than comprehensive policy. However, when your property is located in a risky neighborhood, you have to weigh the options more carefully.

Loss settlement method also influences the total cost of your insurance policy. Actual cash value settlement will result in lower settlement because depreciation is deducted from replacement cost. Replacement cost settlement on the other hand pays for entire replacement including the cost to rebuild the property. As the insurance companies have to pay a hefty sum for total loss, you have to pay higher premium when you buy replacement cost settlement.

Deductibles play a major role in determining the amount of premium you have to pay. When you agree to pay a large sum of money out of your pocket during claims, insurance companies will offer a greater discount in the cost of insurance because you will not make frequent claims. However, you should determine this amount with caution because ultimately, you are on your own for major losses and you should be able to take care of smaller damages with your own money.