clock March 5, 2019 comments No Comments flowchart Homeowners InsuranceOur Blog tag Liability

the dining room of a RI rental property that needs insuranceWhether you rent out your beach cottage, a room in your home, or a second property, you need proper insurance coverage. Here are the insurance implications you should consider.

Occasionally Renting Your Primary Residence

If you occasionally rent out all or part of your home for a few days or a week, your Rhode Island homeowners insurance policy may allow it providing you let them know. However, some insurers require a policy endorsement or rider on your policy.

Renting regularly to guests constitutes a business, and business activities aren’t covered under your homeowners policy. You’ll need a policy tailored for a small business such as a bed and breakfast or hotel, but it is a fully-deductible business expense.

Renting Out A Second Home – Long-Term

Your homeowners insurance policy will not cover damage to your rental property, unless the rental is a portion of the home you live in, as described above.

You should consider buying a landlord’s policy when you rent out a second property to someone long-term. This includes investment or vacation properties you rent to others for extended periods.

A landlord’s policy does cost more than a standard homeowners insurance policy, but it also offers more protection. Your premium depends on many factors including the property location, the structure size and number of rental units, the building age and condition, safety features, and more.

In addition to property coverage for perils such as fire, hail, and lightning, it also covers the personal property you leave on-site. This could include items such as appliances or a lawnmower. You can opt to buy replacement value coverage which pays for replacing the home and contents after a total loss.

A landlord’s policy also includes more liability coverage to protect you if your tenant or one of their guests injures themselves on your property. It compensates you for expenses such as legal fees, and medical bills and settlement costs if you’re found negligent in court.

A typical landlord policy may also provide you with a financial cushion and compensates you for loss of rental income while the property is uninhabitable after a covered event.

Other Considerations

Like all insurance policies, landlord insurance coverage has limits. Discuss your coverage with your agent to ensure you’re properly protected. Insufficient property and liability limits can leave you at significant risk.

You will need to pay your deductible if you file a claim. However, your agent can tailor your coverage, deductible, and premiums to suit your needs and budget.

Some policies cover damage caused by tenants, while others do not. However, you can often add this coverage if the policy doesn’t include it. If you ask for a security deposit when you rent, it usually covers minor problems. However, you’ll need tenant coverage to protect you from the costs associated with extensive damage caused by renters.

Renters Insurance

Your policy protects you and your property. However, it does not protect your tenant. Unfortunately, many people don’t realize this when they rent. If something happens it can lead to a heated dispute and even a lawsuit.

Understandably, many landlords now require their tenants buy renters insurance as a condition of their rental. You’re legally entitled to do so for every tenant, provided you include the requirement in the rental agreement. You can also specify the amount, ask for proof of coverage, and include a clause that requires the tenant maintain their coverage throughout the lease.

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