10 Myths About Real Estate Insurance—Debunked

Real estate investors face many risks, from market fluctuations to unexpected property damage. Yet, one of the biggest risks is believing misinformation about insurance. Too often, investors rely on myths that can leave their portfolios exposed. Let's set the record straight by debunking 10 of the most common real estate insurance myths.

1. Master Policies Are Always More Expensive

Many investors assume that a master policy—covering multiple properties under one contract—costs more than insuring each property separately. In reality, a master policy often provides cost savings through bulk pricing, streamlined administration, and broader coverage options.

2. If My Property Is Vacant, I Don’t Need Coverage

Vacant properties are actually at higher risk for vandalism, theft, fire, and other perils. Standard insurance policies often exclude or limit coverage for vacant properties, so specialized vacant property insurance is critical to avoid costly surprises.

3. Flood and Earthquake Damage Are Covered in Standard Policies

Most standard property insurance policies exclude flood and earthquake coverage. Investors in high-risk areas should secure separate policies or endorsements to protect their properties from these catastrophic events.

4. Landlord Insurance Covers Everything

A standard landlord insurance policy covers property damage and liability, but it doesn’t cover a tenant’s belongings or loss of rental income in all scenarios. Understanding policy limits and adding loss-of-rents coverage can help fill these gaps.

5. I Only Need the Minimum Coverage Required by My Lender

Lenders require insurance to protect their interests, not necessarily to fully cover your investment. Underinsuring can leave you paying out-of-pocket for uncovered losses, making comprehensive coverage a smart investment.

6. Older Properties Are Uninsurable

While insuring older properties can be more complex due to aging systems and outdated construction, many insurance providers offer tailored solutions. Updating wiring, plumbing, and roofing can improve insurability and reduce premiums.

7. Short-Term Rentals Are Covered Under Standard Landlord Policies

If you list your property on platforms like Airbnb or Vrbo, you may not be covered under a traditional landlord policy. Short-term rental insurance or a specialized endorsement is often required to cover liability and property damage risks.

8. Lower Premiums Always Mean a Better Deal

Choosing the lowest premium can lead to higher out-of-pocket costs when disaster strikes. Policies with low premiums often come with high deductibles, coverage gaps, or exclusions that could cost you more in the long run.

9. Personal Homeowners Insurance Covers My Rental Properties

Homeowners insurance policies typically exclude rental properties. Investors should have a dedicated landlord or commercial policy to ensure they have the proper coverage for tenant-occupied units.

10. All Insurance Carriers Are the Same

Not all insurers provide the same coverage options, claims service, or risk assessment. Working with a provider that specializes in real estate investment insurance, like SES Risk Solutions, ensures you get the right coverage tailored to your needs.

Protect Your Investments with SES Risk Solutions

Avoiding these common misconceptions can save you from costly mistakes. At SES Risk Solutions, we specialize in insurance solutions tailored to real estate investors, from single-family rentals to large trust portfolios.

Want to ensure your portfolio is properly protected? Contact Scott Phillips at (657) 261-2470 to discuss your coverage needs today!