Types of rental property insurance
1. Standard Home Owner’s Insurance
2. Landlord Insurance
3. Vacation Rental Insurance
Standard Home Owner’s Insurance protects your home and property against damage or loss due to a covered claim. Also this will provide liability coverage to protect you from legal repercussions in the event someone is injured in the home.
Landlord Insurance offers all the same protection as home owners’ insurance along with a few extras such as
• Provides $1m or more in liability coverage
• Covers legal cost in the event of a lawsuit
• Protects government regulation related lawsuits
• Protects from tenants who damage the property
• Provides loss of rental income if the property becomes uninhabited
The down sides are you will pay more for this coverage compared to the basic home owners insurance. Roughly 25% more.
Things that are not covered by the landlord insurance policy:
• Your tenant’s personal property
• Pet damage
• Natural disasters (floods, hurricane, earthquakes)
If you own a rental property that is located in a location prone to these types of disasters, you may want to consider purchasing more coverage for the property.
How do I know if I need landlord insurance?
• Short term: if you don’t intend to lease the property longer than a week or two I would recommend checking with your insurance provider to see if a plan offers short term coverage.
• Regular basis short term: if you operate a short-term rental property it would be best to purchase a hotel or bed and breakfast policy
• Long term: if you are planning to rent your house or rental property for 6+ months then you will be required to purchase business insurance.
Vacation Rental Insurance
If you live at the property part of the year and rent it out the rest of the year then it would be wise to purchase this type of policy. These policies tend to be more expensive because there is more time that someone will be residing at the property. On average this cost about $2500 a year
As you can see the insurance world is complex and can be very overwhelming. If you are concerned about the coverage you need for your property we highly recommend speaking to your insurance agent or a professional in the business. And as always feel free to reach out to All County!
Here is a link for the top 10 homeowner insurance companies to get you started!