If you are entering property management for the first time, you might have decided to rent your home out to others because of a job transfer or you down-sized or upgraded to a different home. While you might be maintaining your homeowner insurance policy on your rented property, it is important that you understand the reasons you need to carry rental insurance on the property. Many people don’t think about this until an incident occurs.
Rental insurance comes in several different forms. Many insurance companies might require a supplemental rider to an existing homeowner policy. This might especially be true if you have just rented out a part of your home to others. On the other hand, you can find some companies that will require a separate rental insurance policy that offers higher liability limits and has certain exclusions to the contents of the property.
When you are in the business of property management, you never know if tenants might have somebody come onto the property that will have an accident, for example. Even the most innocent circumstances can lead to liability, if you are the property owner. Limits on liability coverage might not cover some circumstances where large medical bills occur or where there might be negligence on the landlord’s part. This is where rental property insurance can be the most important protection for those that have entered property management on a whim or were forced to rent out their home due to a change in living situations.
There are several things to consider when you are in the business of renting property. Having enough liability coverage is important or you could lose personal assets when you get sued. The costs of these types of coverage are in line with your homeowner policy premiums, but there are different limits and exclusions, in certain cases. It is important you understand the differences in your insurance needs. You can be protected from loss of rental income, vandalism and theft by renters and other things that a normal homeowner policy doesn’t offer. These can be important when you are stuck with two mortgage payments and a home to repair, in order to make it livable and rentable again.
The peace of mind that comes from having the proper insurance coverage is worth considering. When you get rental insurance to cover your property, you are protecting yourself against several circumstances you might not have thought of. The increased liability exposure can come from the negligence of tenants, but if you have adequate insurance coverage, this won’t need to be a concern. You can’t know whether a tenant will maintain a property the way you would and this can lead to additional risks that might not be covered under traditional homeowner insurance policies.
Having the proper insurance in place is part of property management, meant to protect your property, as well as yourself. There are many different things to consider when you are renting your property out to others. Having the proper rental property insurance is one of the more important ones.
