Does Homeowner’s Insurance Cover Rental Properties?
Tuesday, September 14, 2021
When it comes to insuring property, there is a difference between being a homeowner and a landlord. Having a rental property can be a great income source, but you will need to have the correct coverage for your type of business. If you rent a room in your primary dwelling, your Homeowner’s policy may offer enough protection. Suppose you rent your primary residence for part of the year or own a full-time rental, though? In that case, you need to look into Rental Property Insurance.
Do I Need Homeowner’s Insurance For Rental Property?
When you own property, there is a distinction between Homeowners and Rental Property Insurance. If you live in the dwelling full time and only rent a portion of your space, your Homeowner’s insurance will probably be all the coverage you need. You might consider an Endorsement for added protection.
You will need a Rental Property Insurance policy, also called Landlord Insurance, if you live off-site. There are further distinctions in short-term vs. long-term leases. A conversation with your agent will help you choose the best policy for your unique situation.
How Is Rental Property Insurance Different From Homeowner’s Insurance?
When you purchase Homeowner’s Insurance, you are looking to protect your dwelling and all of your personal belongings. Insurance coverage for your rental property must take into account that this is an income stream. In a major disaster, you need to cover the dwelling and the items you own in the property; you also need to cover loss of income. Most landlords require long-term tenants to obtain Renter’s Insurance to protect their personal belongings because Rental Property Insurance does not cover those items. Bear in mind that a long-term lease is considered 6 to 12 months.
How Much Is Rental Property Insurance?
Is homeowners insurance cheaper for rental property? On average, Rental Property Insurance is about 25% higher than basic Homeowner’s Insurance. There are a few crucial reasons the coverage for your rental property will cost more.
- Loss of Income Protection
- Added Liability Protection
- Coverage for Code Issues
There are many additional risks when renting your property, and insurance companies are well aware of the higher frequency of claims on income-producing investments. They have set rates for coverage, and you should expect higher costs as a result. There are a few calculators on how to estimate insurance on rental property, but your best course of action is to discuss your situation with your insurance agent. Every property is different, and Independent Insurance Associates is there to help you determine the best way to protect your assets.
What About Air BnB or VRBO Coverage?
The major players in the short-term hosting industry do offer insurance policies. Be aware that most of those policies are in addition to your Homeowner or Landlord Insurance, not a replacement for your regular protection. Read the fine print and research other hosts’ experiences to see if these added protections are necessary for you.
Your local Independent Insurance Associates will be happy to help you understand and choose the right insurance for your home and rental property. We are here to help you understand the nuances and risks involved in renting the space you own. Contact us if you already have or are planning to add this type of income stream. We will help you find the best insurance scenario for your particular needs.