When you make a serious investment like the purchase of an investment rental property, you should be well aware of the potential risks associated. Being sued as a landlord is expensive and time consuming, and you do not want to be found liable for problems or issues that arise related to your property. Here are a few tips to help you learn about protecting your investment and yourself and avoiding potential liability.

The first thing that you need to take care of is ensuring that you have the proper insurance for liability, casualty and property. Each of these three types of insurance is different and you need to make sure that you have adequate coverage in each area. Remember that if someone should sustain an injury on your property, it is not your property insurance that covers the damages, you need liability coverage as well.

Most damage that can arise from storm, fire, or other catastrophic occurrence will be covered by your property or casualty insurance. The liability portion of your insurance policy intends to protect you and your assets in the event that you are found to be responsible for an injury or loss sustained by another person while on your property. Certain areas will also require that you carry flood insurance in addition to your standard coverage. An umbrella insurance policy is wise when you are at risk for sustaining greater liability than your policy may cover.

There are several circumstances in which you may require liability insurance. If a tenant or employee is injured on your property, liability insurance will protect you. Additionally, liability insurance can help to protect you if you are ever sued regarding alleged discrimination by applicants or renters.

Whenever you hire someone to do any work on your property, be sure to check that they have their own proof of insurance. Most contractors will quickly provide you this evidence, indicating that they not only carry liability insurance, but also workers’ compensation coverage.

Schedule a regular review with your insurance agent to verify that you have adequate protection. Even if you initially take out a policy that has adequate coverage, your circumstances can change over time and you do not want to find out the hard way that your coverage is less than you need.

Be sure to have an attorney that you trust, as well as a tax advisor or accountant that can help you track costs and deductions adequately. Plenty of federal and state regulations govern rental property ownership, and you should always keep yourself informed about housing laws, insurance issues, and tax information. Unknowingly violating these laws will not prevent you from getting into legal trouble.

Find out if you need a specific business license in order to run rental properties in your area. More and more municipalities are requiring this as a regulation. For assistance, contact a Michigan property management company.