FRIDAY, MAY 28, 2021
Every homeowner needs homeowners insurance. However, your coverage needs will vary based on the characteristics and intended uses of the property in question. After all, you might own a home, but rent it out to paying tenants. Or, you might even have a roommate in your own home to help you cover expenses, or just to provide companionship.
However, in either case, by allowing a paying tenant to reside in your home, you are assuming a different degree of liability for both the security of the home and that of the tenant. Therefore, the standard benefits of the average homeowners insurance policy might not be adequate for you.
As a result, you might have to convert a basic home insurance policy into a landlord’s policy, which, while similar to the former coverage, is more expansive and tailored to cover liabilities associated with having a paying renter. Let’s take a look at when you might need this more expansive coverage.
How does Home Insurance for Landlords Work?
Buying a rental home is not the same as buying a personal home. Your personal home will become your primary dwelling, whereas a rental home is a property that will only be leased on a temporary and conditional (though ongoing basis) by a paying tenant.
Therefore, while you might not reside in the home, you still have the same level of responsibility for the upkeep of the property. Plus, while the tenant will pose their own liabilities while inhabiting the property, you still have a responsibility for their own security under your roof. As a result, you often face a higher degree of liability as a landlord than you would if you simply inhabited a property as your own dwelling. Therefore, you cannot assume just because someone else lives in your property, that you yourself are free from all obligations for it.
As a result, your landlord insurance policy should be designed so that it insures you for your own property damage and personal liability risks associated with owning the property. However, you won’t be forced to carry coverage that more appropriate for the tenant, which will help you create the best balance of coverage for your own needs.
The Coverage Included Within Landlord Insurance
Your landlord property coverage will need to include several critical units of coverage.
Dwelling Insurance: This benefit helps you pay for damage to the dwelling and can be designed to ensure that you rebuild the property from the ground up following a total loss.
Other Structures Insurance: If you have storage sheds or similar buildings on your rental property, then you can insure them under this benefit.
Maintenance Possessions Coverage: Items that you use to maintain the property (lawn mowers, leaf blowers, etc.), and that you store there, can be insured under this benefit. However, this coverage will not extend to most personal possessions (furnishings, electronics, etc.) that you might leave in the home. It also will not cover the tenant’s personal belongings.
Landlord Liability Insurance: If someone sustains an injury on your rental property (I.e. your tenant falls down the stairs) and sues you over the accident, this coverage can cover the injured party’s medical bills and provide legal assistance to you as a result of the lawsuit.
The primary difference between these benefits and those on the average homeowners policy is that they are customized to the unique needs of landlords, who aren’t permanent residents within the property in question. Therefore, you will need to carry a landlord policy separately from your standard home insurance that you have for your own residence.
Protecting Renters in Your Own Home
Some people rent out rooms, basement apartments or other portions of their own homes. In essence, you might essentially become a roommate to someone who pays you rent. Under the circumstances, a standard landlord insurance policy is not appropriate, since you are hosting a tenant in your own home. However, you can often adapt your own home insurance to address the unique liabilities associated with this living arrangement. Because these coverage options vary among different home insurers. You should speak to your agent to learn more about what you can do to protect yourself.
Furthermore, you should always require your tenants to purchase renters insurance, which provides them with coverage for both their personal possessions and liability risks that they assume by inhabiting the home. Therefore, it will enable them to take responsibility for themselves, and shift a potential cost burden away from you as the homeowner.
To get the appropriate landlord insurance benefit for your rental property, speak to one of our agents today. We are committed to offering you the most comprehensive and effective coverage available to you, without creating an undue cost burden that you can’t afford.
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