Insuring your Rental Investment Property
If you have purchased a home you intend to rent out, it is important that you protect your investment by insuring it properly just as you would your primary residence. In addition you need to be sure you have the property insured on the correct type of policy form to protect you from exposures as a landlord.
Below is an explanation of coverage commonly seen on a Landlord/Dwelling Fire policy for homes or condos rented to others.
Coverage A: Dwelling Limit
Just as with your primary Home/Condo, you must have the dwelling insured at the appropriate limit to be sure there is adequate coverage to rebuild the home in the event of a total loss and to protect your investment. A condominium would require interior coverage for building property or additions and alterations to your unit not included in the master policy and/or excluded in the CC&R’s. Most CC&R’s now require that the unit owner be responsible for insuring everything “from the sheetrock in”. Please carefully review your CC&R’s to determine your responsibility.
Coverage C: Personal Property/Contents
Contents coverage is available to cover belongings owned by you that are on the insured premises. This coverage will NOT cover your tenants' belongings. A tenant should have their own renters insurance to insure their contents as well as (very important for you) providing liability coverage for the tenant. You should require and review an annual evidence of your tenant’s renters policy.
Coverage D: Loss of Rents
Be sure to advise your agent of the monthly rental income. This coverage will pay you for loss of rents in the event of a covered loss that makes the dwelling unlivable. This coverage does NOT extend to the tenant for loss of use. Again they must have renters insurance to obtain this coverage.
Coverage E: Liability
Liability coverage will cover you in the event you are sued for bodily injury or property damage of others property if you are found legally liable for damages. Be sure your policy also includes Personal Injury coverage. Personal Injury coverage will extend to landlord exposures such as wrongful eviction, invasion of privacy, illegal entry, libel and slander.
We recommend that you require your tenant to carry renters insurance to protect themselves from damage to their property as well as loss of use and liability. Many landlords require tenants carry renters insurance as part of the lease as this coverage will also protect your property in the event the tenant causes damage to your home or condominium.
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