Why Do You Need Landlord Insurance And How Do You Find A Good Agent?
Renting your home can result in an extra stream of income. The idea sounds good if you own property in a region where long-term renters account for a good percentage of the population. In Utah’s Dixie region, the mild climate and nearby attractions act as a magnet for those seeking a rental property in a single-family dwelling.
Before You Rent Out Your Home, Think about the Importance of Landlord Insurance
This is different than a more general form of property insurance, and the distinction must be understood fully if you want complete protection from financial loss associated with the rental contract itself.
Why This Insurance Is Important?
If you own property in the southwestern portion of Utah, you know that the probability of finding suitable tenants is very high. What you may not realize is that the current homeowner’s policy you carry does not cover all of the claims types that may be filed. If you rent the property and are no longer living in the dwelling, you might think it is of no consequence. You are the property owner, so why would your insurance provider care who is taking up residency there?
Homeowners Insurance Isn’t Enough
This is a common mistake made by many who choose to rent their home to others. Insurance companies categorize rental homes as “Landlord Property”, and this affects the premium rates as well as certain exclusions in the policy itself. Landlord insurance will cover you, the property owner, against such problems as water or flood damage caused by the occupants, personal property protection, rental income protection, and legal suits filed against you by the party currently occupying the property.
Examples of Landlord Insurance Protection
If a tenant who carries no renter’s insurance is found to be at-fault in causing water damage, you might be stuck with the repair bill if you do not have landlord protection. Likewise, if damage to the home means it cannot be rented for a period of time until repairs are completed, you may suffer a significant financial loss unless your policy includes a clause for this situation. Even if you are renting the property as an unfurnished dwelling, your personal property clause means you can be compensated for damage to carpets, appliances, and light fixtures caused by flood or fire. If the tenant feels your property contains dangerous areas like step-downs to a lower floor surface, he or she could sue you if a tripping accident occurs. Legal suit protection may cover the amount you have to pay as restitution.
Finding the Right Landlord Insurance Agent
There are plenty of homes for rent in Utah, and most of them are owned by someone who carries a general homeowner’s policy. Once the home is advertised for rent, everything changes. The current policy may not cover any of the above-mentioned problems. This is because a rental home is placed in a different risk category, much like a sports car is a higher insurance risk than a compact vehicle. Before choosing an insurance agent to draw up a landlord policy, look at the listings and see if the agency or its parent company even has a specialized program for single-family rentals. When you talk to an agent, ask about the different clauses and see if there is a suitable policy that includes the standard property liability coverage as well as any legal, medical, or acts of nature provisions.
Most importantly, think about the property types in the southwestern region of Utah. Does your home fit in nicely in terms of average real estate value? What possible damage could occur here that would be unlikely elsewhere? The agency or insurance company you choose should be familiar with the real estate landscape of this region.
