Insuring a Rental Home
Renting out real estate in any form, be it an apartment, condo or freestanding structure, comes with its own set of risks. Unlike traditional home ownership where your chief concern is damage to the things you own, rental home insurance tends to focus more on property and injury liability. Conventional home insurance scarcely begins to cover the sort of issues you are likely to see as a de facto landlord, which is why rental property insurance has become such a popular choice. If you have found yourself struggling to find the perfect policy, you may be heartened to know this industry is actually pretty simple.
Most rental property insurance begins with similar damage coverage as traditional homeowner’s insurance. That means you can choose either a “named perils” or “open perils” policy – the kind that comes with regular premiums and a fixed deductible. Depending on that home’s location and the kind of abuse it is likely to see, you may also want to purchase additional catastrophic coverage for mudslides, earthquake or flood. Which possessions you list on the policy is largely a question of how you intend to manage the property as well – fully furnished living spaces will need more coverage than basic lofts, for instance.
Equally important is an airtight and comprehensive personal liability clause built into the policy. Conventional and first time homeowners often opt out of getting this kind of insurance, as they assume the chances of a guest injuring himself in the home are minimal. Not so with a rental property – you have no control over what goes on inside that home, and it’s not unusual to see damages from such litigation stretch into six figures and beyond. Stick with policies that cover every type of injury and make special provisions for multiple accidents if you want to enjoy true financial security for years to come.
Finally you want to be covered in the event that one or more renters cannot meet the payment schedule anymore. Of course you assume some risk when you run credit reports and choose who will live there, but there is no reason to absorb the total cost in the event of a default. Sound property rental insurance usually comes with significant sums built in for events of this sort, so be sure and ask about so-called “loss of use” clauses from the beginning of this process. You may also want to clarify whether additional moving and cleaning costs can be counted against the policy in the case of an eviction.
Rental homes can represent steady profits and regular appreciation. If you want to maintain a healthy property and do not relish the thought of chasing residents for every little problem, it may be time to look into some of the top-rated property rental insurance carriers in this marketplace. Often with a little research and a good sense of what you want, you can zero in quickly on policies that meet your budget and needs in one fell swoop.
