Home Insurance For Landlords
Homeowners have many reasons to consider renting out their home. Perhaps you have a second home you want to lease out, or you want to downsize into a smaller home while enjoying passive income every month. Either way, it’s important to understand that a standard homeowner’s insurance policy may not cover you against losses you incur while your home is rented out.
At the very least, you need landlord property insurance. Depending on your situation, you may need even more specialized insurance. Real Property Management Southern Utah can help you better understand your situation and refer you to an agent who will get you the coverage you need.
What You Should Understand about Rental Insurance Policies
What Is Best For Short-Term vs Long-Term Rental?
To determine the type of policy that’s best for your situation, it’s first important to determine if you’re going to rent out your property for a short period of time — such as a few weekends a year — or long-term for six months or longer.
If you are doing a short-term rental, some homeowner’s policies will keep you covered. Others require an endorsement to your existing homeowner’s policy to cover you. Your homeowner’s policy may consider any short-term rentals a business activity, however, which may require you to purchase a business policy, such as a bed and breakfast policy.
You may also be able to get an endorsement on your existing policy if you will live in the same house as your tenant.
If you will rent out your home for a long period of time, you will probably require a landlord policy. Landlord insurance usually costs about 25% more than the average homeowner’s policy as you need greater protection.
What Is Landlord Insurance?
Homeowner’s insurance typically only covers owner-occupied homes. When you rent out your home, you will usually need a type of policy called landlord insurance, which covers your structure against physical damage as well as personal property you leave for tenant use or maintenance, such as lawnmowers.
One of the biggest benefits of landlord insurance is it protects you if your home becomes uninhabitable, covering you with the rental income you would have received from tenants for as long as it takes to repair the home, or up to 12 months.
Landlords also need more liability protection against claims of property damage and personal injury. Most landlord policies include liability protection that covers you if you are sued.
Why Do You Need Landlord Property Insurance?
Regardless of why you’re renting out your home, you want to be protected if something happens. If you rely on your homeowner’s insurance, you run that risk that a claim will be denied. This means you can be left footing the bill if your home suffers flood or fire damage, vandalism, theft, or an accident, such as a dog bite on the premises.
What is Renter’s Insurance?
As a landlord, your insurance will only cover the structure itself and your financial interest. This means your tenant’s personal property will not be covered under your policy. Many landlords today require tenants to carry their own renter’s insurance before signing a lease. This may be a good decision as it can avoid disputes if your tenant’s belongings are damaged. It also shifts some of the responsibility away from you, including some responsibility if someone is injured on your property.
Important Reasons for Requiring Renter’s Insurance:
- Lawsuits are less likely. Depending on what caused the damage, tenants are less likely to bring a lawsuit against a landlord when their damaged belongings can be replaced. Even when the tenant is clearly to blame, you are saved the time and money of defending a lawsuit.
- Clean-up may be covered after damage. Many renter’s insurance policies cover replacing damaged belongings as well as the removal of destroyed property. This means that if the house floods, you will not be stuck with removing a home full of destroyed furniture.
- Liability coverage. Liability coverage is typically included in a renter’s insurance policy. This coverage pays you for repairs necessary after a tenant causes damage to your property and it means you can avoid making a claim on your own policy. There will also be no need to try to sue the tenant for damages. Many policies even offer personal injury coverage to protect you and the tenant if someone gets hurt on the property.
The Bottom Line
Renting out your home can be a great solution to your needs, but it’s important to do it the right way. The right landlord property insurance policy will make sure you’re covered and give you peace of mind while your home is occupied.
If you search for property management companies Utah, you will find that Real Property Management Southern Utah is the best because of the level of service we offer.
