Landlords – Don’t be Caught by Surprise!
It is very common to find homeowners who may run into a little luck or some inheritance, buy a new home and begin renting out their prior home; in fact, there are tens of thousands of these cases nationwide. Something that seems very normal may simply cover up the risk involved.
FACT: tenant occupied homes are 9 times riskier than owner-occupied homes as observed in a 2015 study published by the Insurance Information Institute. The most likely perils which caused the findings were: tenant negligence, fire damage, smoke damage, and water damage; in each of these cases, it would be likely that the owner would’ve prevented the issue if he or she lived in the home and acted on early signs of discovery.
Another very scary and real FACT is that if your ‘home’ insurance isn’t a Landlords Policy (or a Tenant Occupied Dwelling Fire Policy), the insurer is most likely to deny a claim stating the occupancy of the home wasn’t reported as required by the fine print in the Homeowners Insurance Contract.
It is true that the peril of ‘FIRE’ is covered under both a Homeowners Insurance Policy and a Landlords Insurance Policy but the conditions of the contract and risk factors are very different. The following are some items which may be covered under a Landlords Policy:
- Fair Rental Value – Loss of Rent
- Premises Liability – Owners, Landlords & Tenants Liability
- Personal Injury – Wrongful Eviction
For those moving out of their home for the purpose of renting out the home, it is prudent to purchase a Landlords Insurance Policy upon signing a lease agreement; further, it would be very wise to require the tenant to purchase a ‘Renters Insurance Policy’ and list the homeowner as an Additional Insured.
Renters Insurance policies are very inexpensive and the Landlord would only be interested in the liability portion of the policy; should the tenant cause damage due to negligence, the Landlord (if listed as Additional Insured) would have the right to make a claim on the policy as well as regularly receive a copy of all policy documents.
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