Rental properties are a great avenue to earn additional income. If renting out a residential property for the first time, you may not realize the risks and liabilities that tag along. You need landlord insurance to cover any liabilities arising in a home where you don’t reside.
Whether you’re renting out an apartment, home, or space inside your own home, you need to buy insurance for rental property to protect yourself and your property.
Why You Need Landlord Insurance
Landlord insurance gives a landlord an added home insurance coverage for exposure to any lawsuit filed by the tenants. Whether you’re renting out a house or apartment unit, you need to get the insurance for a rental property to cover the risk that arises out of renting to a tenant.
Consider the below scenarios:
- Lost Rental Income: You may find that a tenant has paid the rent, but you never received it. Now, the same tenant wants to sue you for wrongful evictions.
- You can handle this situation with landlord insurance, as it offers temporary rental reimbursement to cover the money.
- Property Damage: The tenant may leave something on the stove, and the house catches fire, destroying your personal property and appliances which you rented along with the property.
- To handle this situation, you can get coverage for risks, such as a natural disaster, fire, earthquake, electric/gas malfunction, etc. If possible, choose a policy that offers replacement cost rather than actual cash value.
- Liability Protection: Sometimes, a tenant may be injured badly while cleaning the window. In a lawsuit, they may claim that their injury is your fault and try to make you pay for the medical bills.
- You can get coverage for medical or legal costs that arise if any tenant or visitor suffers injury due to a property maintenance issue.
- Your insurance for rental property will not only cover the property but will provide liability coverage, protecting you from such lawsuits.
Rental Home Insurance for Your Basement Apartment
If you want to rent out a section of your property or a basement apartment, you need to check with your insurance agent first. It may be necessary to secure your separate entrance. Make sure you remain compliant with the carrier’s requirements.
Don’t just choose a minimum coverage if you’re renting out a room. Insurance has to be taken for a rental unit that is attached to your home. At least, write a clause in your lease that requires a tenant to carry rental insurance at all times during the lease.
How to Get Rental Property Insurance?
When shopping for insurances, make sure you ask your homeowner insurance provider about a bundle of options. Don’t simply assume that it will cover all damages and liabilities while you’re not living in the property. Before you begin price shopping, talk to your agent extensively about the type of rental dwelling, consider what you need to address, and protect your rental property.
If you’re looking to protect your home and rent it out nicely, landlord insurance is necessary. It offers additional landlord liability coverage for the risks associated with being a landlord.