A rental property can be a great investment and is an asset a lot of people are putting their money into these days, but it’s also important to make sure the property is correctly covered in regards to both the structure and your assets within the home.
Many consumers may have their rental properties underinsured in terms of personal property. This can include things like kitchen appliances, washers and dryers or furniture you’re providing for the tenant, etc. It is important to know that when you own the property, these things are not permanent structures of the home and would be items needing to be covered under the personal property option of the policy and not covered under the dwelling coverage. Rental properties are generally written on different policy forms than your primary home. The reason why this is important is because you do not automatically get many coverages that are generally provided for you in a standard home policy such as personal belongings and higher other structures coverage.
Another important element that customers are oftentimes not aware of is an option on a rental property policy is “Fair Rental Value”. This coverage is very important because this assists you in recouping monthly rent revenue that you are collecting from the tenant in the event that the home becomes damaged and the tenant can no longer reside in the property, therefore no longer paying rent. An example of this would be if your tenant was paying $1,000 a month, you would want to carry $12,000 worth of Fair Rental Value on your policy so that you are reimbursed lost rent while your house is being fixed or replaced. The idea of this coverage is to help cover your losses up to a year, assuming that’s enough time to have your house repaired or replaced.
It is also important to know that you may be required to have your primary home insured with a company before they will allow you to insure a rental property. Allied Insurance underwriting does require that the insured’s primary home is insured prior to accepting rental policies from the insured. This is primarily due to liability concerns for the carrier. It makes it much easier to adjust a liability claim to when all the assets are with one single carrier. It prevents two carriers subrogating against each other on the claim. A primary home policy could include a renters, condo or primary home policy, depending on your personal living situation.
It is also very important as a landlord to have your tenant to carry a renter’s insurance policy while living in your home as well. This will provide liability coverage for them that will provide funds to fix any damages caused by the tenant while residing there. This will ensure that your asset is being protected against negligence or accidents caused by the tenant. The last thing you want to do is have to file a claim against your own insurance policy for something someone else did.
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