Many times, someone will purchase a new home and keep the old home as an investment property to rent out. This can be a great investment strategy but there are a few things you need to know about your insurance before you rent it out.
Homeowner & Landlord Policies
First things first, you’ll need to get a new insurance policy. Your Homeowners policy only covers owner-occupied properties. A Homeowners policy packages several different coverages together and is rated on the assuption that the person living in the home is the owner. The Homeowner policy covers the home, the contents inside the home, as well as providing liability coverage to the homeowner.
If the property might be vacant or occupied by a renter, a different type of policy is required. These are usually called Landlord policies although it might also be called a Fire policy. The policy only covers the house and provides very limited, if any, coverage for the contents inside (since they belong to the tenant).
If you rent out your old home and neglect to switch to a Landlord policy, any claim you file could be denied! It is, therefore, very important that the property be insured correctly and you’ll want to start by meeting with your agent to review the different options.
The next thing to consider is if you should require your tenants to carry Renters Insurance. This is a really good idea!
Renters Insurance not only covers the tenant’s belongings inside the home, it also provides liability coverage for the renter! How does this help you? If your renter leaves the stove on and burns down the house, you could receive compensation for their negligence through the liability portion of their Renters Insurance instead of having to file a claim on your policy. It’s also a good protection if you allow pets. If the tenant’s dog bites a visitor, their coverage would kick in to cover it, avoiding potential liability issues for you.
The last thing you’ll want to look at is your own personal liability coverage. You’ll want to make sure that you are carrying a sufficient amount of liability coverage on your personal auto and home insurance since your risk for being sued increases. You may also want to look at an umbrella liability policy for additional coverage.
This may sound complicated, but we can make it very quick and easy! Call us today and we’ll help you look at all of your needs as a new landlord.
You can call us at (509)783-5600 or come into one of our offices in Kennewick, Pasco, or Yakima, to get a quote on your home, your investment properties, or even a renters insurance policy with the coverages, options, and deductibles that you can afford.