Renting your home can be an exciting and fulfilling adventure. You’re taking the leap to put your property on the rental market and start earning a profit. But like any good adventure, it can also be fraught with setbacks and peril. Some you can plan for—others you can’t. That’s where landlord insurance comes in.
Many landlords might think they’re covered by homeowner’s insurance. In general, homeowner’s insurance covers any buildings on the property and the contents within. But there are many other challenges landlords can face that could create a serious financial hardship. Many things, like a loss of income due to a major repair, you can’t always anticipate. That’s why rental property insurance — also known as landlord insurance — is so important. It goes beyond standard homeowner’s insurance to protect you against every possibility. As a landlord, your property is your business, and smart businesses insure.
In our latest video Matt Elliot, an agency owner with Farmers Insurance, breaks down some of the key things to know about landlord insurance. Check it out here, and while you’re at it, make sure to subscribe to our YouTube channel for more useful videos about turning your home into a rental.
Landlord Insurance Details
There’s a lot to consider when deciding what kind of insurance is right for you, but Rent Portland Homes by Darla Andrew is here to keep you informed. Generally, there are three types of coverage included in rental property insurance, and there are a few things you should keep in mind about each.
If a person gets hurt on a property you own, you could face a lawsuit. With accidents in U.S. homes resulting in 20 million emergency room trips per year, your tenant doesn’t have to be an aspiring knife juggler to risk injury. If a jury finds you negligent in maintaining the property, you could be held financially responsible. Even failing to warn a tenant of a potential safety risk could put you legally at fault.
It’s difficult to anticipate what might become a liability issue. A railing that has held steady for years could give out all at once or an unforeseen security issue could put your tenants at risk. In some cases you could be found at fault for not taking action against a tenant’s illegal behavior. Having a liability policy in place gives you peace of mind. If you are found to be at fault in a lawsuit, liability insurance can help pay for legal costs rather than requiring you to pay out of pocket. It can even help cover any judgments the court rules against you, up to the amount stated in your policy.
Renting can be an uncertain business. With premises liability, you can feel confident in having a safety net for the times when disaster strikes.
Loss of Income Policy
A homeowner’s policy can help cover damage from a serious disaster like a fire or flood. However, if that disaster makes the unit uninhabitable, you’ll also miss income from lost rent. That’s where a loss of income policy comes in.
Rather than facing a month or more of zero income from the property in question, a loss of income policy ensures you keep getting that rental income. This coverage is often available for up to twelve months, though policies may vary.
It’s devastating enough to have to absorb the cost of a serious repair. Losing the income of a tenant’s rent only increases the hardship. A loss of income policy means one less thing to worry about—and that can make all the difference.
Vandalism and Malicious Mischief
Let’s say you end up with a bad tenant. Not just a tenant who doesn’t pay their rent on time, but one who intentionally damages the property on their way out. While landlords can sue a tenant for damages, not everyone wants to face the uncertainty and hassle of small claims court. With a vandalism and malicious mischief policy, you can be certain to recoup the costs of the damages without relying on a court verdict.
The difference between vandalism and malicious mischief can be difficult to determine. Vandalism is always intentional, though malicious mischief may result in damage inadvertently. Either way, your property ends up damaged and you don’t want to be on the hook for it. One of the most common perpetrators of vandalism are angry romantic partners. With vandalism insurance, the fallout from a tenant’s bad breakup doesn’t need to end up on your bill.
Make Sure Your Policy Doesn’t Expire
Sometimes it can be challenging to find a new tenant for a property. Many insurance providers require you to convert your landlord insurance to a vacant policy after just thirty days of the unit being unoccupied. Depending on the time of year and current market conditions, that can be too short.
It may be worth paying more for a policy with a more lenient timeframe. An option like Farmers’ platinum endorsement grants ninety days between tenants before you have to file for a vacant policy. With more flexibility, you have less to worry about during a lull between tenants.
Don’t Risk It
In many ways, having a tenant is an exercise in trust. You are putting an extremely valuable asset in the care of strangers, and trusting that they will take good care of it. Or, that if they don’t, you can cover it with their security deposit.
But your livelihood is a lot to stake on trust alone. Rental property insurance allows landlords to feel secure in knowing they’re protected. Though the law doesn’t require this kind of coverage, landlords who don’t invest in it are taking a risk. You wouldn’t choose to forgo car insurance just because you haven’t been in a collision yet. So why wouldn’t you insure your rental property before disaster strikes?
At Rent Portland Homes by Darla Andrew, we can help investment property owners navigate these complicated decisions. Like a good insurance policy, we offer security and increased peace of mind. With our team managing your property, you won’t have to worry about the details and setbacks. That’s our job. For more information, call or text us at (503) 515-3170 or fill out the contact page on our website.