Rental property insurance, often known as landlord insurance, may not be required by law, but it’s a smart way to protect your property and the investments you’ve made as a landlord. Consider it a good business decision. Here’s what you need to know about insuring your rental property.
Multiple Forms of Coverage
When you purchase landlord insurance, you’ll be covered in multiple ways.
Property damage: This includes the building and any of your personal property you’ve left on site. Ideally, you should purchase enough coverage to fully replace everything.
Liability protection: You’ll be covered from liability claims and lawsuits, up to your policy limit. This includes liability for both bodily injury and property damage. Your insurance will pay medical costs, funeral costs, legal fees, settlements, and more.
Loss of income: This may not be standard in all policies, but ask your insurance agent about loss of income coverage. You’ll be reimbursed for the income you lose while your rental is uninhabitable and being repaired or rebuilt.
Other optional forms of coverage: Talk to your insurance agent about other additional coverage for your rental: rent guarantee, employer liability, landlord contents (furnishings, carpets, etc).
Homeowners Insurance Won’t Cover You
Only in very specific situations might your homeowners insurance still be applicable when you rent your property. You’ll still need to be living there and making it your main residence. Talk to your insurance agent about a special rider for occasionally renting your property. But if you rent it out regularly, even if only once a month or so, you’ll need landlord insurance coverage.
If you’ve turned your home into a rental in order to generate income, you’re in business as a landlord, and need rental property insurance. Not buying a new policy could result in a denied claim and dropped coverage later. Without this coverage, you’ll have to pay out of pocket for damage, liability claims, and more.
Landlord insurance is an investment, just as your rental property is an investment. You’re protecting yourself from potential financial loss from accidents and injuries, storms and theft, and much more.
Renters insurance is what your tenants purchase to protect their personal belongings in case of a storm, accident, or other covered peril. No law requires them to purchase coverage, but as their landlord you can require it as part of the lease agreement. If you do, you must require it for every tenant you have — you can’t pick and choose which tenant should buy and who doesn’t have to. You can also require that they buy a certain amount of coverage and that they show you proof of coverage before moving in.
For renters, the cost is minimal, but the benefits are enormous. If disaster strikes, they’ll be covered, and it will be easier for them to move back in once the damage has been repaired. Tenants who can’t afford new clothes or a new couch likely won’t be able to afford to rebuild and pay the rent. It helps your tenants and you if they carry renters insurance.
If it’s been a while since you updated your rental property insurance, it’s time to talk to an agent. And if you’re jumping into the rental game with your own investment property, make sure you start out with the right coverage. Contact Charlotte Insurance today for a free quote.