Before you ever hand over the keys to your first tenant, it is important to take a look at your options for landlord insurance. Some landlords assume that they are protected by their homeowners insurance policy, but this can be a costly mistake if an accident or injury takes place. Here is a closer look at exactly what this insurance covers and who needs it.
Who Needs It?
The phrase “accidental landlord” has recently become popular because so many people are finding themselves renting out their homes, apartments, and spare rooms in order to bring in some extra cash. For those that are sharing an address with their tenant, a rider may be sufficient. When the tenant lives on an alternate piece of property, however, landlord insurance will be needed. This includes situations in which the landlord lives in the same complex but another unit.
These policies actually blend many of the characteristics of business insurance and home insurance. This begins with generic coverage for issues such as the interior or exterior of the home being damaged or vandalized. Depending on the exact riders that you choose, this may not cover some specific natural disasters such as flooding and earthquakes as they are purchased on a case-by-case basis. If a tenant, guest, or trespasser is injured on your property, then your policy will cover some or all of the costs. As for legal claims against you, these policies will also cover some or all of the fees associated with a trial.
Loss of Income
The loss of income coverage is another vital component of this type of insurance. In addition to common issues such as a theft taking place or a fire within the home, you will also be protected if the building becomes uninhabitable due to a covered loss. An example of this would be a fire that requires six months of repair work. If the tenant cannot live in their home, then the policy will actually pay the rent for a set period of time.