How to Get Home Insurance for a Rental Property

Introduction

If you have rental property, homeowners insurance might seem like an unnecessary expense at first glance. After all, the property belongs to someone else, and you just live there. But there are several reasons why it’s worthwhile to invest in home insurance to protect your investment, whether it’s a single-family home or an apartment building filled with tenants.

Types of Home Insurance

The first step in getting home insurance is to figure out what kind of policy you need. There are two main types: HO-1 and HO-2. HO-1 policies cover buildings, while HO-2 policies cover both property and liability. Generally speaking, if you are renting out an apartment that is located within your own home—you probably only need an HO-1 policy. If you’re running a business as part of your rental property, such as Airbnb or Sittercity—an HO-2 policy would likely be more appropriate.

Identify the Main Considerations in Your Home Policy

Here are some things that may be covered under your home insurance policy, and thus main considerations in your property search: Fire, Flood, or Wind Damage – Your home insurance should cover damage caused by fire, flooding, and wind. However, there are different kinds of coverage options. For example, flood insurance is not included in most standard home insurance policies. If you live in an area where flooding is common or near water sources like rivers or lakes, it’s likely you’ll need to purchase additional coverage. Loss of Use Coverage – This type of coverage will pay for temporary housing if your rental property is damaged beyond use and you have no other living space on-site (e.g., apartments). Liability – If someone slips and falls at your rental property, who’s legally responsible?

Do You Need Homeowner’s or Renter’s Coverage?

The simplest answer is that you need home insurance for your rental property. This will cover any damage or injuries suffered by guests and will help cover repairs on damages that may occur. If you choose not to get insurance, or can’t, you are responsible financially. However, it’s worth pointing out that many landlords only carry liability insurance, which covers others but not their own property; they use their personal homeowner’s policy as a way of protecting themselves from significant financial loss.

What Kind of Deductible Do You Need?

The deductible is that chunk of money you pay before your insurance kicks in. The higher your deductible, the lower your monthly premiums will be. However, keep in mind that you have to have cash or other reserves on hand in case disaster strikes. If you can’t come up with $5,000 to cover damages after a break-in, for example, it doesn’t matter how little your premium was—you won’t have any coverage. To get home insurance for rental property, choose a high deductible but don’t go overboard (unless you have cash set aside). Aim for one that’s equal to about 5 percent of what you’re paying every month on rent—then make sure it’s something you could realistically come up with if disaster strikes.

How Much Is Enough?

If you’re renting out your home, or a portion of it, and are insuring it under an existing policy, check that policy’s coverage limits—you may need more coverage than what you have. If you’re using your own home insurance on your rental property, get separate tenant liability insurance so now you can protect yourself from possible lawsuits.

What Type of Coverage Should You Choose?

The type of insurance coverage you choose depends on your situation. Standard home insurance usually provides more protection than renters insurance, but comes with a much higher premium. Your landlord may require that you carry specific policies as well; it’s best to check before renting if you don’t already have a policy in place. For example, many landlords will want to make sure your belongings are covered in case of fire or flood damage while they might also require liability coverage if anyone is injured at your property.

Have an Emergency Kit on Hand

You’re not only responsible for protecting your own family, but you’re also liable for protecting your tenant’s property and any guests who may be staying there. If you don’t already have one, consider putting together an emergency kit that includes items like flashlights, batteries, a first aid kit, and extra phone chargers. Think about getting renters insurance too—it can protect both you and your tenant from financial losses that are caused by fire or water damage (among other things). Plus, it will ensure that any possessions damaged in a disaster can be replaced.

Protect Against Flooding Damage

Flooding is one of nature’s most devastating and common disasters. Homeowners in flood-prone areas can purchase flood insurance from their homeowners’ insurance provider, but most renters are not eligible for coverage under a renter’s policy, leaving them without protection against damage due to flooding. It is important that renters check with their landlord about whether he or she has purchased flood insurance on the property. If they have not, you may wish to take out your own policy through an independent company. Consider contacting your landlord every year before renewing your lease to confirm that they are still providing adequate coverage against flooding and other hazards at your residence.

Conclusion

If you’re renting out your home or apartment, then it’s crucial that you protect your property against damage or loss. Home insurance is one of those essential costs that we all have to endure if we want to protect our homes and our valuables. However, there are some unique considerations when it comes to home insurance and rental properties. We talked about some of these in previous sections, but here’s a quick overview: * Add yourself as an additional insured: This protects you financially should one of your tenants hurt themselves on your property—not likely but still worth considering! * Make sure you understand what is covered: Make sure you know whether rental income from sub-tenants is covered.

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