The declining housing market created plenty of new landlords, some of whom may have never planned on owning rental property. Some are leasing a house they couldn’t sell, while others are taking advantage of low prices and investing in properties to rent. Still others are renting out floors or rooms in their own homes.
One thing all landlords need is proper liability insurance coverage on their rental properties:
- If you’re renting a room or section of your own home, you will probably be okay with your existing homeowner’s insurance coverage.
- Ifyou don’t live in the same house with your tenants, you’ll likely need a separate policy.
Why Do You Need Landlord Liability Insurance?
Imagine losing your savings over a lawsuit brought by a tenant because of an injury suffered on your property. Or if a neighbor’s child is bitten by your tenant’s dog on the sidewalk in front of your property. Even a visitor to your tenant’s unit could possible sue if he or she is injured on your property through no fault of yours.
Will your retirement fund be wiped out? What about your kids’ college funds? Could you lose your home, as well as your rental property? All of these assets could be at risk when you begin renting out a property you own without proper liability insurance.
Check with your insurance provider about your options. They may include:
- Basic coverage, for fire and vandalism.
- The next level of coverage will typically include acts of nature, such as windstorms.
- The top tier, an “open peril” policy, covers all perils, except those specifically named.
Some insurance companies offer special landlord insurance packages, which typically cover damages to your building and outbuildings, as well as your personal property stored on site. Some offer loss-of-rental-income and legal defense and court cost coverage.
If you’re a new landlord who hasn’t yet looked into insurance, your next call should be to your insurance agent!
The contents of this article are intended for general information purposes only, and should not be relied upon as a substitute for obtaining legal advice applicable to your situation.
Read the original post: New Landlord Basics: Insurance