Some landlords,
particularly the beginners renting out their property, will generally assume
that they are covered with their residential insurance in times of a damaging
event, accident, or disaster. There is a good chance that your existing policy
will only cover the home that the owner occupies. The insurance policy will no
longer apply when you start renting out your property to other people. Since
the renter will not be responsible if there is an accident or appliance
malfunction, you as the owner will be liable for all the cost and the claims.
This is why it is essential to have landlord
insurance.
The Provisions of Landlord Insurance
A comprehensive
and good Landlord Insurance coverage
will mainly include different levels of protection such as the following:
·
Liability Protection- This is the coverage intended for the legal or
medical expenses if the tenant or a guest acquired an injury due to issues like
architectural damage, icy walkways, and others.
·
Rental Default- On the off chance that an unfortunate event occurs that
makes your rental property uninhabitable, like a sinkhole, rat, termite, or
mold infestation, this will provide a temporary reimbursement that will cover
the lost rental income.
·
Property Damage- This landlord insurance coverage is intended for your
furnishing and real estate property if they suffer damage due to irresponsible
tenants, vandalism, earthquake, appliance malfunction, fire, and natural
disasters.
There are also
instances that the Landlord Insurance
will come with supplemental coverage. These are not as vital as the provisions mentioned
above, but they can also be essential if you want to save some cash. It may
include emergency coverage, flood, and guaranteed income policy.
How Much Does it Cost?
On the latest
study, the average cost of home insurance is around $800-$1,000. Unfortunately,
this is only a fraction of the cost of Landlord
Insurance since rental properties tend to acquire more damages. You should
expect to pay at least 20% for this coverage. There is also a relationship between
the time that the property is in rental service and the cost of the premiums.
You should expect to pay higher premiums when you rent your property for 12
weeks rather than for the entire year. It is probably because short-term
tenants will less likely notice the maintenance issues. They do not thoroughly
understand the property's layout, such as the electrical wiring and the load-bearing.
When you are
looking for Landlord Insurance, make
sure to ask your insurance provider about the bundle option. If you choose to
buy both insurances from the same agency, you will likely receive a discount. Read
the details and provisions carefully before affixing your signature on the
contract.
Before deciding to
rent out your property, make sure to analyze your home insurance coverage. Do
not readily assume that it will cover your liabilities and damages. If you want
to rent it out, having Landlord
Insurance is definitely a must.
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