If you’re wondering if you need to purchase Landlord Insurance or if you can stick with your current policy, the answer is simple; a standard home insurance policy won’t cover rental activities. There are some cases where you may be able to keep your current insurance policy such as; renting out a room or suite in your home.
Landlord Insurance – why do I need it?
If you are renting a separate home, you do not live in – you will need to purchase landlord insurance. If you have a mortgage on your rental property, you will likely need insurance on that as well.
A Landlord policy will help you repair or rebuild if your rented dwelling is damaged by fire, wind, or another covered loss. Also, covered? Any other structure on your property such as a shed or fence.
What else is covered?
For landlords, content coverage is usually limited to “landlord belongings”, things that belong to you and the property. Major appliances, fixtures, tools, and maintenance equipment (lawnmower, etc).
You may also want to add additional coverages such as earthquake, sewer backup, and overland water. Water damage is on the rise so ensure you are adequately covered and take all preventative measures.
What is Earthquake Insurance?
Earthquake coverage covers loss or damage to your home and personal belongings caused by tremors or shaking from an earthquake. It doesn’t however cover loss or damage caused by a flood or tsunamis which are triggered by an earthquake.
It is important to understand there are separate coverage limits for your home, belongings, and any detached structures (as shed or garage). There may also be additional costs that are not covered, such as temporary living expenses and moving. Generally, each policy will have a house limit, the estimated cost to replace the entire home.
Most policy’s have a 5%, 10%, or 15% deductible based on the house value.
Why are the deductibles so high? When an earthquake happens, it’s a large-scale event that affects every home in a wide area. These high deductibles mean that a majority of your loss (and everyone else’s) is covered.
What happens if the damage is so significant my tenants must move out?
Landlord insurance covers the loss of rental income until the property can be rented out again. This is generally for a limited amount of time, 12 – 18 months.
Do I need liability coverage?
You won’t be able to control how often or how well your tenants shovel the walk to prevent trips and falls. Or perhaps there is a broken step on the property and a tenant or a tenant guest trips and falls and seriously hurts themselves. Or what if your property has a fire and damages the house next door? Landlord liability protects you in the event of property damage or injury arising from your ownership of the property. it is important to ensure you have enough liability coverage to safeguard yourself in these situations.
The main thing to remember as a landlord is that you’re exposed to different kinds of risks than the risks that come with being a homeowner. Landlord Insurance is a smart way to protect your investment.
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