There are no two insurance policies that are the same. A rental property Insurance policy is very important for landlords and property owners to have because it can provide an ample amount of protection when you need it most.
Understanding Rental Property Insurance and Why It's Different from a Homeowner’s Policy
First, it’s important to understand the difference between rental property insurance and homeowners’ insurance. A homeowner’s insurance plan provides protection for the home that you and your family live in or a secondary home that you may stay in for part of the year. Rental property insurance is coverage for property that you own, but you do not live in. This is property that you rent out to tenants.This type of insurance policy is designed differently because there are several different risks involved when it comes to the owner of a home or apartment building that you rent to someone else. Issues such as slips and falls, vandalism, and theft will often occur at a location where the actual property owner is not present. Plus, it may not always be possible to get the full details regarding an accident or injury if you were not physically there when the incident happened.
The 6 Important Clauses in a Rental Property Insurance Policy
It’s imperative that all rental property owners have the right insurance policy to keep them from losing money or assets that would be impossible for them to gain back. Here are some of the most critical clauses for any rental property policy.
1. Dwelling Coverage
This is the most basic type of property coverage you can have. It insures the dwelling itself and will protect the owner against costs due to structural damage to the property. This can include problems with the plumbing or gas system, cables, pipes, internal fixtures, fixed appliances and fittings. If available, you may want to get a Guaranteed Replacement Cost coverage, which will pay to replace or rebuild the property, even if the materials are more than what you were insured for.
2. Water or Flood Coverage
Water or flood damage is usually added on to your main policy and not included with standard coverage. It takes care of water damage to the building and any belongings inside. It will also cover the cost of broken pipes, damaged water heaters and more. Keep in mind that additional flood insurance is needed for protection against floods, rain damage, sewer backups and water issues due to hurricanes or other storms.
3. Personal Property Coverage
This is an essential form of coverage to have if you are a landlord and renting a home that is already furnished. There are some renters who prefer it even if they are renting an empty home or apartment. The coverage takes care of damage to carpets, curtains, furniture, home goods, appliances and light fixtures.
4. Coverage for Acts of Nature
An act of nature can include a tornado, hurricane, or an earthquake. Some rental property insurance policies will not include this type of coverage, so it is important to ask about it, especially if you own property that is in a hurricane or tornado zone. In most cases, this clause is not included with standard renter’s insurance plans, and you will need to inquire about it to learn more.
5. Fair Rental Income Protection
Also known as ‘loss of income’ insurance is a type of policy that allows you to collect the rental amount of the property over time if you are unable to get the payment from your tenants due to repairs or a catastrophe. Most standard policies will not include this, and the coverage works along with damage claims that have caused the property to be deemed non-habitable.
6. Legal, Liability, and Medical Coverage
If a tenant, one of your employees, or a contractor sues you for damages, this
type of coverage can help prevent you from paying for everything out of your own pocket. This is a policy that all landlords should have since it is very easy to have a stack of legal fees build up over things that are out of your control. These policies often have no limits and are excellent for renters who have more than one rental property.To learn more about Rental Property Insurance Policies, contact the experts at demontinsurance.com at (850) 942-7760. Our licensed insurance experts will be happy to answer any questions you have."
