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Understanding Landlord Insurance

Reblogger
Property Manager with Gibson Management Group, Ltd.

 

Landlords who are becoming RENTERS can bundle their Renter's Insurance with their homeowner/landlord insurance and keep their coverage in one place.  I point would-be clients to their insurance agent FIRST and their tax professional SECOND

 

Original content by Deana "Dee" Brummett NC# 264393 SC#81758

 With the housing market being in the state that it is currently in some homeowners are considering renting their homes until recovery happens. If you are considering renting out your home here is more information on how your insurance coverage may be affected.

By: Dona DeZube

Turning your home into a rental or buying an investment property? Expect to pay up to 20% more for the right insurance policy to protect your property.

 

Rental properties require their own type of coverage--landlord insurance, which is different than the homeowners policy you buy when you live in a house yourself. Landlord insurance protects you against losses from fire, lighting, falling trees, wind and hail, water damage, and injury to your tenants and their guests.

But it doesn't cover the renters' household goods. So encourage tenants to buy a renters policy to cover their stuff. You can even include a clause in your lease saying they have to buy renters insurance, so everyone is clear about what's insured and what's not.

Landlord insurance is expensive

You'll pay 15% to 20% more for a landlord insurance policy than you will for a homeowners policy on the same house--and even more if you offer short-term rentals. Start your policy shopping by calling the company that sold you your homeowners insurance, then check with an independent insurance agent selling commercial and business policies.

Ask how you can get discounts if you have fire prevention devices, burglar alarms, or multiple properties.

What a landlord insurance policy probably will cover:

  • Lightning, windstorm, hail, explosion, riot and civil commotion, smoke, falling objects, snow, ice, sleet, vandalism, sonic boom, sprinkler leakage, frozen pipes, water damage, burglary, volcanoes, and sinkholes.
  • Things that belong to you that stay at the property, like appliances, furniture, or lawn care equipment. Keep an inventory of what's on site.
  • Outbuildings, like sheds or garages, although this coverage will have its own limit (probably 10% of the overall insurance policy amount).
  • Costs to defend yourself against lawsuits filed by tenants or guests, as well as the costs awarded if you lose the case. Some policies cover medical bills for injuries; some don't.
  • Lost rental income if the property is damaged and you can't rent it.

What a landlord insurance policy probably won't cover:

  • The tenants' belongings.
  • Your rental property if it's vacant for more than 30 days. Seek an exemption in advance from your landlord insurance company as soon as you know the property is going to be vacant.
  • War and nuclear, biological, chemical, or radiological attacks.

Optional coverage you might want to buy:

  • Flood
  • Earthquake
  • Vandalism (if the policy you buy excludes it)
  • Pool and tennis court insurance
  • Liability for personal injury, wrongful eviction, wrongful entry, libel, and slander

Don't forget liability coverage

To cover yourself in case you lose a big court case filed by an injured tenant, buy an umbrella insurance policy that gives you liability protection for $1 million to $5 million or more if you have a lot of assets to protect.

Don't file a claim unless you absolutely have to

There's a limit to how many claims you can file before insurance companies start charging you more or canceling your policies. Claims can quickly add up as you buy more rental properties.

One time you always want to file a claim is when someone says they've been injured on your property. One claim you'll want to avoid filing: water damage for less than $10,000 because worries about mold growing in water-damaged properties will lead some insurers to immediately cancel your insurance policy.

More from HouseLogic

How to Correct Your Clue Insurance Report

Improve Your Insurance Score

Other web resources

Renters Insurance Brochure to Share with Your Tenants

Dona DeZube, HouseLogic's News Editor, has been writing about real estate for over two decades. She lives in a suburban Baltimore 1970s rancher on a 3-acre lot shared with possums, raccoons, foxes, a herd of deer, and her blue-tick hound.

 

 

Dee Langley

Realtor/Broker/The Realtor's Helper

Keller Williams Realty

3430 Toringdon Way Ste. 101

Charlotte, NC 28277

Cell: 704.989.9793 Office: 704.887.6630

Fax: 704.887.6830

deelangley@kwcharlotte.com

http://www.deelangley.com

therealtorshelper@gmail.com

www.therealtorshelper.blogspot.com

 

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Posted by

Wallace S. Gibson is a Certified Property Manager with over 50 years of property management experience and expertise.  She maintains a specialized property management business in Central Virginia serving Albemarle, Greene, Fluvanna and Louisa counties  

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Comments (6)

Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Hi Wallace - Great re-blog.  It is amazing how few landlords understand their insurance.

Jul 07, 2011 11:48 PM
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

Many DIY landlords NEVER consider the liability issue of renting their former homes.  VERY POOR thought process if they can't change their homeowner hat to their landlord hat and think of these items

Jul 08, 2011 12:05 AM
FN LN
Toronto, ON

Wallace - DIY landlands need to understand that the insurance companies price their policies based on risk levels and other factors.  If you do not properly advise them what you are doing with the property and they later find out, such as during a claim, the landlord may find the claim denied as the risk was not covered by the policy.

Jul 08, 2011 12:12 AM
Juan Bassett
Long & Foster - Germantown, MD
GRI

Very informative. I will share with my future landlord clientele. I did have a landlord client years ago who had a tree fall on her house the day after she rented it. Fortunately she had insurance to cover the incident.

Jul 08, 2011 12:35 AM
Dick and Dixie Sells
Sells Real Estate, LLC - Trinity, FL
Realtors, Tampa Bay Florida Homes For Sale

Wallace, glad you did reblog this. It is definitely better to know this information up front and not after the fact!

Jul 08, 2011 01:05 AM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Wallace, thanks for the reblog. I need to talk to my son, who is doing rentals for his condo clients and see if he knows that

Jul 09, 2011 06:20 AM