Owning a rental property comes with plenty of expenses.

Mortgage payments, property taxes, repairs, maintenance and insurance all affect the return on your investment. So it makes sense to look for opportunities to manage those costs.

Landlord insurance is no different.

But there is an important distinction:

Cutting costs is smart. Cutting important coverage isn’t.

The goal should be to find ways to manage your landlord insurance premium while still protecting the property, your liability and the rental income you rely on.

There is no single trick that will lower every landlord’s premium. Insurance companies price properties differently, and the savings available will depend on the property, insurer and coverage.

Some changes may qualify you for a direct discount. Others can improve the risk, reduce the likelihood of claims or give your broker more insurance options to consider.

Here are nine ways landlords may be able to manage their insurance costs without simply buying less protection.

1. Consider a Higher Deductible

One of the most direct ways to potentially lower your landlord insurance premium is to increase your deductible.

Your deductible is the amount you agree to pay toward a covered claim before the insurance responds.

Generally, the more risk you are prepared to keep yourself, the less the insurer may charge you.

But there is a trade-off.

A higher deductible means more money out of your pocket if something happens.

Before increasing it, ask yourself:

• Could I comfortably pay this amount tomorrow if I had a claim?
• How much would the higher deductible actually save me?
• Is the annual saving worth taking on the additional risk?

A landlord with several properties and strong cash reserves may be comfortable with a higher deductible than someone purchasing their first rental property.

Ask your broker to show you the available deductible options and what each one does to the premium.

2. Install Water-Leak Detection or Automatic Shut-Off Protection

Water damage can become expensive very quickly.

A small leak under a sink, behind an appliance or in a basement can cause significant damage if nobody notices it right away.

That risk can be even greater in a vacant unit.

Water-leak detection systems can alert you when water is detected. More advanced systems can automatically shut off the water supply when a leak is identified.

Consider protection in areas such as:

• Basements
• Utility rooms
• Under sinks
• Near water heaters
• Near washing machines
• Near dishwashers
• Mechanical rooms
• Vacant units

Some insurers may recognize approved water-detection or automatic shut-off systems when determining premiums or available discounts.

Even when there is no direct discount, catching a leak early can prevent a small problem from becoming a major insurance claim.

Before installing a system specifically to save on insurance, ask your broker whether the insurers they work with recognize particular types of equipment.

3. Add Security and Fire Protection

Steps that help prevent theft, fire and other losses may also affect how an insurer views the property.

Depending on the insurer, discounts may be available for certain protective systems.

These can include:

• Professionally monitored security alarms
• Monitored fire alarms
• Sprinkler systems
• Smoke detection systems
• Deadbolt locks
• Security cameras
• Exterior lighting

Good protection is about more than saving on your premium.

A monitored fire alarm that alerts someone quickly or a security system that discourages a break-in can reduce the severity of a loss or help prevent one altogether.

Again, ask before you invest solely for a discount. Different insurers may have different requirements for monitoring, installation and approved systems.

4. Keep Major Building Systems Updated

Insurers pay close attention to the systems that can cause some of the most expensive property losses.

That includes:

• Roof
• Electrical system
• Plumbing
• Heating
• Oil tanks
• Water heaters
• Wood-burning equipment

An older property is not necessarily difficult to insure.

But an older property with original plumbing, aging electrical systems, an outdated roof and an older heating system can be viewed very differently from a similar-aged building that has been properly updated.

If you have completed major upgrades, make sure your insurance broker knows.

Examples could include:

• Replacing the roof
• Updating electrical wiring or panels
• Replacing older plumbing
• Installing a heat pump
• Replacing an oil tank
• Upgrading heating equipment
• Replacing a water heater
• Completing major renovations

Updates may improve the risk and, depending on the insurer, could affect pricing or increase the number of insurance options available.

5. Stay on Top of Routine Maintenance

Insurance is not a maintenance contract.

A small problem that is ignored can eventually become an expensive loss.

Think about:

• A slow roof leak
• Clogged gutters
• A dripping plumbing connection
• Poor drainage
• Deteriorating caulking
• A loose railing
• A heating system that needs servicing
• Signs of moisture in a basement

Catching problems early can help keep repair costs manageable and reduce the chance of a larger loss.

For example, a small plumbing leak may be relatively easy to repair when it first appears. Left unnoticed for months, it can damage flooring, drywall, cabinets and other parts of the building.

Good maintenance may not automatically earn you a discount, but it can help prevent claims.

And claims history can affect what you pay for insurance over time.

Consider creating a regular maintenance schedule covering:

• Roof
• Gutters and drainage
• Heating
• Plumbing
• Electrical systems
• Smoke and carbon monoxide alarms
• Steps and railings
• Decks
• Water heaters
• Oil tanks
• Propane appliances
• Wood-burning equipment

Good maintenance protects more than the insurance premium.

It protects the investment itself.

6. Screen Your Tenants Carefully

Tenant screening may not directly reduce your insurance premium, but it is still an important part of managing the overall risk of owning a rental property.

Responsible tenants are more likely to:

• Take reasonable care of the property
• Report leaks and maintenance problems early
• Follow building and fire-safety rules
• Let you know when something is wrong
• Respect the property
• Maintain their own tenant insurance where required

A problem reported quickly can often be dealt with before it becomes an insurance loss.

Landlords should follow all applicable provincial tenancy, privacy and human rights requirements when screening prospective tenants.

Depending on the circumstances, screening may include things such as:

• References
• Rental history
• Employment or income information where permitted
• Credit checks where appropriate and permitted
• Conversations with previous landlords

The objective is not simply to find someone who will pay the rent.

It is to find a tenant who will treat the property responsibly and communicate with you when something needs attention.

Encourage or Require Tenant Insurance

Tenant insurance is also worth discussing before move-in.

Your landlord policy generally does not protect the tenant’s furniture, clothing, electronics and other personal belongings.

Tenant insurance can protect those belongings and provide the tenant with personal liability coverage.

That liability protection can become important if the tenant accidentally causes damage and is found legally responsible.

7. Ask About Multi-Property Discounts and Options

If you own more than one rental property, make sure your broker knows.

Depending on the properties and insurer, there may be opportunities to:

• Qualify for multi-property discounts
• Review several properties together
• Coordinate coverage
• Simplify administration
• Align renewals where possible
• Review your overall liability exposure
• Review total rental income coverage

Even when there is no specific discount, looking at several rental properties together may uncover inconsistencies or inefficiencies.

For example, you may discover that:

• Liability limits differ from one property to another
• Deductibles are inconsistent
• One property has rental income coverage while another does not
• Multiple policies are renewing at different times
• Property details have not been updated

As your rental portfolio grows, the insurance should be reviewed as a portfolio rather than simply one property at a time.

8. Review Your Insurance With Your Broker Every Year

Rental properties change.

The insurance market changes too.

That makes an annual review worthwhile.

Before renewal, tell your broker about any significant changes, such as:

• Renovations
• New roof
• Plumbing upgrades
• Electrical upgrades
• New heating system
• Added rental unit
• Change in occupancy
• Vacant unit
• Change from long-term to short-term rental
• New security or water-detection system
• Purchase of another rental property

Then ask your broker to review:

• Available discounts
• Deductible options
• Coverage limits
• Rental income protection
• Liability coverage
• Water damage options
• Other insurers that may be a good fit

Do not assume the insurance you arranged three or five years ago is still the best option today.

And do not simply let the policy renew without checking whether anything has changed.

9. Keep Your Property Information and Replacement Cost Accurate

Your insurance should reflect the property you actually own.

One particularly important number is the amount required to rebuild the property after a major insured loss.

That is not the same thing as market value.

A home’s selling price can be influenced by:

• Location
• Land value
• Supply and demand
• Neighbourhood
• Real estate market conditions

Insurance replacement cost focuses on what it could cost to reconstruct the building.

That can depend on:

• Size
• Construction type
• Labour costs
• Building materials
• Number of storeys
• Finishes
• Demolition and debris removal
• Renovations
• Location and accessibility

Make sure your broker has accurate information about the property.

Do not deliberately reduce the building amount just to lower the premium.

Being underinsured can create much larger problems after a major loss.

At the same time, incorrect or outdated property information can mean your premium and coverage are not properly aligned with the property.

Accuracy matters.

Other Discounts May Be Available

There can also be insurer-specific discounts that have nothing to do with changing your coverage.

Depending on the insurer and your circumstances, these might relate to things such as:

• Claims-free history
• Customer loyalty
• Multiple properties
• Alarm systems
• Fire protection
• Water-leak detection
• Other qualifying features

You do not need to memorize every discount offered by every insurance company.

Ask your broker:

“Are there any discounts or savings opportunities I qualify for that I am not currently receiving?”

It is a simple question worth asking.

Be Careful About Cutting Coverage Just to Save Money

There are two very different ways to lower an insurance premium.

One is to make the property a better risk, take advantage of legitimate discounts and choose a deductible that makes sense.

The other is simply to buy less insurance.

Those are not the same thing.

Reducing important coverage may lower the premium, but it can also leave you with substantially more financial risk.

Before removing coverage or reducing a limit, ask what you are giving up.

For example:

• Will the building still be adequately insured?
• Do I still have rental income coverage?
• Is my liability limit sufficient?
• What water damage protection am I losing?
• Are garages and other structures still covered?
• What will I now have to pay myself after a claim?
• What types of losses will no longer be covered?

Saving a relatively small amount on the annual premium may not make sense if it exposes you to a much larger loss.

Preventing Claims Can Be One of the Best Long-Term Strategies

Not every loss can be prevented.

That is why you buy insurance.

But landlords can take reasonable steps to reduce the likelihood or severity of many losses.

Fix the small leak.

Service the heating system.

Remove the garden hose before winter.

Replace the deteriorated roof.

Install the water sensor.

Repair the loose railing.

Check in with your tenants.

Ask them to report problems quickly.

These actions may not all produce an immediate discount on your next renewal.

But avoiding a significant loss can help protect your property, your claims history and your insurance options over the longer term.

The Bottom Line: Lower Your Premium the Smart Way

There are legitimate ways landlords may be able to manage their insurance costs without simply reducing protection.

Consider:

1. Choosing a higher deductible
2. Installing water-leak detection or automatic shut-off protection
3. Adding security and fire protection
4. Keeping major building systems updated
5. Staying on top of maintenance
6. Screening tenants carefully
7. Asking about multi-property discounts and options
8. Reviewing your insurance with your broker every year
9. Keeping your property information and replacement cost accurate

The goal should not be to find the cheapest landlord insurance at any cost.

It should be to find the right coverage at a competitive price.

See If You Could Save on Your Landlord Insurance

Already have landlord insurance?

It may be worth taking another look.

Munn Insurance’s local insurance experts work with landlords throughout Newfoundland and Labrador and Nova Scotia. We can review your rental property, look at your current insurance and explore the options available from the insurers we work with.

Whether you own one rental property or a growing portfolio, we can help you look for opportunities to save while making sure you understand the coverage you are getting.

Get a landlord insurance quote today.

Visit: https://www.munninsurance.com/landlord-insurance-program/

Call: 1-855-726-8627

Cut costs where it makes sense. Not the protection your investment depends on.