Investing in real estate is different than investing in Wall Street stocks. Stocks are speculative, and they’re also a “paper asset.” The stocks might go up and down but there isn’t much that can happen to the “financial instrument” itself (especially since they’re stored electronically instead of as stock certificates now). Real estate on the other hand, when done properly, provides steady cash flow and is a real asset… which means something could happen to your real estate.
The cash flow is nice… but you need to protect the real asset (and yourself). That’s where insurance comes in. Insurance is like a “reset button” to help you recover financially from a loss. If you invest in real estate, maybe you’re wondering, “What insurance should I have for my rental property in Milwaukee?”
Here’s a checklist of insurance that you may need:
Checklist: What Insurance Should I Have For My Rental Property In Milwaukee?
There are many possible insurance products that can benefit you but the primary ones are below. (You may choose to purchase the relevant ones separately or you might want to ask your insurance broker if they have “landlord’s insurance” since some insurance companies will package the right ones together for your convenience.)
Property Insurance.
Property insurance acts as your financial safety net, covering potential damages caused by fires, storms, or other unexpected disasters. However, not all policies are the same, and coverage limitations can be costly if not carefully reviewed. For example, while standard policies might cover fire and wind damage, they often exclude certain types of water damage, including sewer backups and flooding.
In Milwaukee, this is especially important. Areas near the Milwaukee River or Menomonee River Valley are more prone to flooding, and many landlords may not realize that standard property insurance does not cover flood damage. According to the Wisconsin Office of the Commissioner of Insurance, landlords in high-risk flood zones should consider purchasing separate flood insurance through the National Flood Insurance Program (NFIP). Reviewing your policy with an insurance broker before signing can prevent costly surprises later.
Liability Insurance.
If a tenant or visitor is injured on your property, you could be held financially responsible—even if you weren’t directly at fault. This can be especially concerning in colder months when icy sidewalks and stairways increase the risk of slips and falls. A lawsuit could result in medical expenses, lost wages, and legal fees that quickly add up.
Consider this: in 2023, a Milwaukee landlord was sued for $250,000 after a tenant slipped on an unshoveled walkway. The landlord’s liability insurance covered the claim, but if they had been underinsured, they might have faced significant out-of-pocket costs. Milwaukee’s city ordinances require property owners to remove snow and ice from sidewalks within 24 hours after snowfall, and failing to do so can not only result in lawsuits but also city fines.
When selecting liability coverage, ensure your policy includes personal injury protection, which covers claims related to wrongful eviction, slander, or libel—common risks that landlords may overlook. Consulting a local insurance professional can help tailor coverage to your specific needs.
Tenant Insurance: Tenant insurance isn’t something you need to get for yourself but we’re mentioning it here because it’s something you should urge your tenants to get. Tenant insurance is insurance for tenants that will cover any financial loss of their belongings.
Here’s How These Insurances Work
Imagine this scenario: A fire starts in the kitchen of your rental property due to an electrical issue. Your property insurance covers the cost of repairs, but what if the fire spreads to a neighboring unit? In this case, your liability insurance may step in to cover damages to adjacent properties. Meanwhile, if your tenant’s belongings—like furniture or electronics—are destroyed in the fire, their tenant insurance ensures they don’t come after you for compensation.
However, not all policies are created equal. Some landlords assume they’re covered, only to find out they have a cash value policy rather than a replacement cost policy, which significantly affects payout amounts. A cash value policy factors in depreciation, meaning you could receive far less than expected after a disaster. Checking these details before an incident occurs can make all the difference.
Get The Insurance You Need
Beyond property, liability, and tenant insurance, landlords should also consider business income insurance, which covers lost rental income if your property becomes uninhabitable due to a covered event like a fire. Some landlords also opt for umbrella insurance, which provides additional liability coverage beyond standard policies—an important safeguard if you own multiple rental units.
If you’re financing your rental property, your mortgage lender may require certain types of coverage. For example, Fannie Mae’s rental property insurance guidelines mandate a minimum level of hazard and liability insurance. Checking your loan terms can help you avoid policy gaps that might put you at financial risk.
Since every property and landlord situation is different, it’s critical to speak with an experienced insurance broker who understands Milwaukee’s rental market. A one-size-fits-all policy doesn’t exist, so tailoring coverage to your specific risks is the best way to protect your investment.