Not exactly what you want to find in your house. Definitely not what you want to find in your rental property.
If you have a rental property with a basement, this is a reality you likely will have to deal with, but there are ways to mitigate the risk as well as outcome.
Two perspectives come into play here–that of the Landlord and that of the Tenant.
(Standard disclaimer here before we get into the nitty gritty: I’m not a licensed insurance agent and the comments below are not intended to be taken as providing such professional insurance advice. Please contact a licensed insurance agent to discuss your particular situation.)
Let’s look at the Landlord issues first…
- Make sure you replace your sump pump approximately every 3 years, even if it is functioning. It’s a motor and moving parts. Things break, wear out, get stuck. Better to be safe than sorry. Consider it like changing the transmission fluid in your car. Doesn’t need to be done every year, but it still should be done.
- Have a quality battery back up system in the sump pit. Not one of the cheaper systems found at Home Depot or other big box retailers. The type you want will cost in the range of $2000-$2400. With major storms often come major power outages. Don’t find yourself in trouble because you went the El Cheapo route.
- Have the correct insurance policy in place as a landlord. There is a misunderstanding out there that Landlords can’t get Sewer & Drain Backup endorsements on their rentals….not true at all. You simply need to find the correct insurance carrier who will write the coverage. Many insurance companies offer this additional coverage for Landlords. This endorsement will help defray the costs of damage to the structure, pump out of the water and the ensuing drying out process, and remodeling costs, if any incurred. One additional note to consider: The deductible for any losses for sewer and drain backup may be higher due to the simple fact of a higher frequency of claims and poor loss history for this specific peril, but it’s better than absorbing the hit all by yourself. (Shameless plug for one of my favorite insurance agents: Ryan Samuelson of Samuelson Insurance (317) 777-4454. Contact him as he can shop the top rated carriers and provide some solutions you likely don’t know about with your current carriers. He’s earned my trust and business.)
Now let’s look a the Tenant issues next…
- I have written about this in other blog posts before, but DEMAND that your tenants have Renters Insurance in place. Here’s one such past blog post covering this issue in detail: https://polarismanage.com/uncategorized/why-you-need-to-require-renters-insurance-from-your-tenants/
- Recommend that your tenants ALSO get a rider on their policy for coverage in case of sewer and drain back up should their personal property be damaged. This will cover their dry out costs/clean up costs of any contents they lose in a flooded basement situation.
- Damage to tenant contents due to an interior water pipe bursting, however, should be covered as a standard peril for the tenant under “sudden and accidental discharge”. This is different than a sump pump failure flooding a house.
In summary, owning a rental with a basement can be very profitable property when managed properly with deploying the correct risk management techniques like those mentioned above.
As always, if we can assist you or answer any questions, call or click. We’re here.