Homeowners Insurance for Rental Properties

Owning a tenant- occupied rental property can be a great source of extra income, but also a source of worry. After all, tenants rarely take the same kind of care with a rental property that they would with a property they own themselves, or they may not be around to handle an accident or emergency such as fire or theft. If you are a residential landlord, purchasing a homeowners insurance policy tailored to rental dwellings is a key component in protecting your investment.

Standard homeowners insurance policies cover, to varying degrees, the cost of replacing the structure of a home, replacement of personal possessions, the cost of alternate accommodation if the homeowner is forced out of his or her home during repairs, and liability protection, but landlords may want the additional protection offered by policies geared toward rental situations.

Advanced liability protection is especially important for landlords who want coverage from personal or property lawsuits arising from injury or damage lawsuits that result from the use of your rental property. For example, something as simple as a broken step that hasn’t been repaired in a timely fashion can turn into costly medical and lost wage potential lawsuits if a tenant falls and breaks a leg or suffers some other injury while trying to navigate that step. Landlords can’t prevent all accidents that may occur on their properties, so it is best to be protected against any potential legal aftermath.

Homeowners insurance coverage of personal possessions may not be a priority for landlords who have few of their own possessions in a rental property, although if the property is furnished, this kind of coverage should be a consideration. Tenants should be encouraged to purchase their own personal ‘contents’ property insurance, and should be advised regarding the scope of the landlord’s coverage and any liability they may face while inhabiting the property. Protection of assets stored in a separate building, such a car parked in a detached garage, should also be discussed.

Private homeowners insurance companies may also offer miscellaneous insurance protection that applies specifically to rental properties. Examples may include replacement cost of locks and keys if their has been a theft, compensation for losses assessed against the landlord by an association, or loss-of-income protection if a rental unit is damaged in a manner covered under the policy.

Landlords may discover that insurance costs are higher for vacant properties. Installation of a monitored alarm system may help to reduce costs. Some homeowners insurance policies are more expensive if the property is vacant and some are more expensive if the home is occupied by tenants, so it pays to shop around for the coverage that best fits your circumstances.