The Joys of being a Landlord...
Questions you need to know and why to ask them!
As an insurance agent I have the pleasure of working with investors that purchase both commercial and residential properties to lease to others. When advising them on what kind of coverage they need there are some important questions to ask and information needed to be relayed to them. First it is important to ask, "Is the policy placed in force a "landlord" policy or a commercial habitational policy, not a homeowners policy?" A homeowners policy will not provide the correct coverage and if a claim is filed the insurance company can deny the claim based on tenant occupancy. Folks often purchase a new home with the intention of renting out their current residence, however they forget to inform their agent of the change of occupancy and when filing a claim on this rental property they find out the claim is denied! Yes, insurance companies do have the right to deny a claim if the occupancy type changes from when the policy was originally written.
Another unpleasant surprise is the vacancy clause, most insurance companies have it written in the policy that if the dwelling is vacant for more than 30 days then there is no coverage. It is the responsibility of the owner to inform their agent so that the policy can be changed/re-written to cover the vacant property. Vacant policies are more expensive than the standard landlord polices, due in part because vacant properties have a much higher risk of vandalism and property loss from water and fire than occupied dwellings do. Have you asked.. "Is my vacant property covered?"
Here is something else you might not have thought of, "Does your policy cover vandalism?" Some landlord polices exclude vandalism while others allow it to be added for an additional cost. If the vandalism is done by your tenant, it is also not covered. This is why it is important to have your renters carry Renters insurance, the liability coverage on the renter’s policy is to protect YOU, the landlord!
Above are a few of the things that landlords need to be aware of when securing a landlord policy, most importantly find an agent that will spend the time to make sure you understand the coverage you're purchasing for your new investment. After all, you spent time evaluating the property and the ROI, shouldn’t you spend the time to review your insurance coverage?
Contact the Luci Temple Agency at 512-913-9637 if you have any questions, we are happy to help!