Will my Policy Cover my Rental Properties?

Every homeowner needs basic house insurance or vacation home insurance, whether the dwelling is rented out or not. If you do rent your home out to another family, it may be even more crucial to have insurance protection since you do not actually reside in the home. At the same time, you might consider purchasing landlords insurance in order to protect yourself against lost income in the event of a disaster. Keep in mind that your tenants will require their own insurance policies to cover their personal property--such policies do not cover your home, and you are not responsible for your tenant's belongings.

What House Insurance Covers

Homeowners insurance goes hand in hand with purchasing a house. In fact, the coverage is even required if you pay a mortgage on the home. The primary function of house insurance is to protect the dwelling against a possible total loss related to disasters and accidents. A fire, severe storm or acts of vandalism can wreak havoc on your home, and you will need to financial backing in order to make matters right again.

Floods, earthquakes and landslides are other significant events that can occur, but these disasters are not covered by general house insurance. However, you have the option of adding special riders to your policy to protect you from such events. Your ultimate decision for adding these features on depends on the risk factors. For example, a homeowner might need earthquake coverage in California, while a Florida resident may not.

A homeowners insurance policy can also cover your personal belongings, but only if you reside in the home. The basic protection related to house coverage still stays in place, regardless of whether you rent out the home or not. Due to the fact that many accidents are related to human error, many homeowners consider it even more important to cover their properties if the houses are rented out to other people.

Renters and Landlords Policies

Aside from homeowners insurance, there are two types of coverage you should be familiar with when it comes to renting out your property. A renters insurance policy is coverage that your tenants obtain at their own free-will. Although your house insurance covers the dwelling, it does not cover your tenant's personal belongings. Renters insurance covers the belongings of those living in your home--however this does not mean that the coverage pertains to the actual building. You still need basic homeowners coverage in place in order to protect your house against a total loss.

Disasters can occur at any time, and they can even happen due to an accident on behalf of your tenant. House insurance is designed to cover these events as long as they occurred at no fault of your own. However, a basic house insurance policy generally does not cover a loss of income related to a lack of a renter when your home is being rebuilt.

If you rent out your home, you should strongly consider adding landlords insurance to your basic policy. The purpose of this kind of coverage is to protect you in the event that your home is uninhabitable, but you lose out on income from your tenants. When your house is declared as a total loss, then your tenants can no longer live there. At the same time, they are not required to pay you rent during the weeks or months that the home is being rebuilt. Landlords insurance kicks in to make up for the amount of money lost until your house is rented out again.

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