If you’ve ever owned a home, you should be familiar with a homeowners insurance policy. What you may not be familiar with is how that policy should change if your property is being used as a rental.
We will get into the nuts and bolts of what different policies mean below, but the biggest takeaway you should have from this is if you aren’t 100% positive you have a landlord insurance policy and your property is a rental, you need to call your insurance agent right away.
What’s the difference?
A quick way to think of the difference between an average homeowners insurance policy is that a general homeowners insurance policy will not cover the property if the homeowner is not living there. Having renters opens greater risk and liability from an insurance perspective, so it’s important to make sure your insurance policy reflects this.
What does it cover?
There are various types of policies which may be called anything from landlord insurance, rental dwelling policy, or tenant occupied dwelling insurance. Not all policies are created equal and your coverage will depend on your policy, but a good policy should include the following:
Property damage insurance: Any physical damage to the home caused by things like fire, weather, vandalism, etc.
Liability insurance: Injury to someone living in or visiting the property.
Loss of rents: Reimbursement for any interruption to rental income due to damage or loss of property.
What does it NOT cover?
It’s also important to note something that is not covered in a landlord policy, which is a tenant’s belongings. In the event of fire, flood, theft, or any other damage-causing incident, any personal items belonging to the tenant are not part of this coverage. For this reason, it is important to make sure your renters carry their own renters insurance policy.
How much does it cost?
Like any insurance policy, it’s dependent on many factors specific to the home, location and policy holder. An industry standard is to expect to pay between 15% to 20% more for a landlord policy than a typical homeowners policy (source).
If you are considering buying a rental property or already own one, make sure you talk to your insurance agent about the type of coverage best suited for your property. If you have any questions about these coverages or would like to be certain you are adequately covered, see your local insurance advisor.
We recommend Ryan Robertson with American Family Insurance. His team here in Bend is professional, responsive and always quick to help and answer questions. You may contact Ryan at 541-317-2835.