clock January 14, 2022 comments No Comments flowchart Family & Home CareHomeowners InsuranceOur Blog tag
an "apartment for rent" sign outside of an apartment owned by someone that needs a landlord insurance policy.

When you rent out a home, apartment, or condo you may wonder which is the best way to protect your asset. Of course, you want to keep costs down, but you don’t want to put your property at risk.

While a landlord policy isn’t legally required, we strongly suggest this protection if you’re renting or managing a property. Here’s why a landlord’s policy is your best choice.

You Can’t Depend on Your Homeowners Insurance Policy

Regrettably, some landlords assume their homeowners insurance provides sufficient protection for their rental property, when this isn’t the case.

A standard homeowners insurance policy usually only covers an owner-occupied home. Policies also exclude coverage for short-term rentals should you decide to rent out your property occasionally.

This may also apply if you are sharing your home with a renter. For instance, if you rent out your basement, your homeowners insurance may not cover you if the insurance company deems it a rental.

Every insurance company defines “rental” differently. For instance, they may consider it a rental if the unit has a separate door. They may also consider how the space connects to the main structure or sits on the land.

Renters Aren’t Held Liable

If someone injures themselves on your property and it wasn’t caused by the tenant, you may be held liable. You could find yourself in the midst of a costly lawsuit, without insurance coverage.

Equally, if the tenant unknowingly leaves the door unlocked and thieves clear out the A/C unit and hot water tank, they’re not the ones that feel the financial impact. Your tenant could also leave a tap running, flood your property, and leave you picking up the cost. Even if they have renters insurance, it won’t cover the damage.

It’s The Only Way to Fully-Protect Your Asset

Landlord insurance provides broader coverage to fully-protect your asset. These policies usually include at least three basic coverages:

Property Damage

A landlord’s policy offers similar property damage coverage to that of a homeowner’s policy, but for a rental property. It covers perils such as theft, vandalism, storm damage, fire, and more.

You can choose between actual cash value or replacement value policies. Actual cash value compensation deducts depreciation. Replacement value provides compensation for repair or replacement at today’s values.

Liability

As mentioned, liability is a serious consideration when you own rental property. If you don’t have proper insurance coverage, you could face a liability claim or lawsuit. This could occur if your tenant or a visitor hurts themselves on your property.

The costs associated with a bodily injury claim can be significant if you are found liable. They can include legal fees, medical payments, court costs, a judgment, and even funeral costs if the person dies.

Should property damage occur on your property due to your negligence, you could also find yourself in a legal pickle. The tenant could make a claim for damages to their personal property. If damage extends to a neighbor’s property, they could seek compensation too.

Lost Rental Income

Some problems can’t be anticipated any may lead to your property becoming unhabitable. Examples include pest infestations, mold growth, fire, storm damage, or even a sink hole developing in the backyard.

Unless you have a landlord policy, you’ll lose out on the rent. Fortunately, lost rental income coverage provides temporary financial compensation for this lost revenue.

Optional Coverages

It’s simple to add riders to a landlord policy for additional protection. Talk to your insurance agent. They can advise you on which coverages best suit your needs.

For instance, you may want natural disaster coverage if your rental is in a high-risk area. You can also buy landlord’s contents coverage if you store many items on the property.

Let us review your existing coverage to make sure that your assets, and your livelihood, are well protected. Contact us, today!

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