What’s The Difference Between Home & Fire Insurance?
Many times, someone will decide to purchase a new home, but keep the old home as an investment property and rent it out. This can be a great investment strategy but there are a few things you need to know about your insurance before you make the change.
First things first, you’ll need to update to a new insurance policy. Your Homeowners policy only covers a property that is owner occupied. These policies are designed to package several different coverages together. They cover the structure itself, the contents inside the home, and provide liability coverage to the homeowner.
If the property is going to be vacant or occupied by a renter, then a different policy is needed. These are sometimes called Fire policies or Landlord policies. The policy covers the house only and does not provide coverage for the contents inside. You’ll need to discuss with your agent what kind of liability coverage is included and if you’ll need to purchase additional liability coverage to protect your assets.
If you rent out your home and neglect to switch your coverage to the correct policy, any claims could be denied. It’s very important that the property be insured correctly and you’ll want to start by meeting with your agent to review the different options.
The next thing to consider is Renters Insurance. Many landlords require their tenants to purchase renter’s coverage. This is a really good idea!
Renters Insurance covers the contents inside the home, not the structure itself, which is great for the renters. However, it also provides liability coverage for the renters. How does this help you? Let’s say that your renter leaves the stove on and burns down the house. You could receive compensation for their negligence through the liability portion of their Renters Insurance. It’s also a good protection if you allow pets. If the tenant’s dog bites a visitor, their coverage would kick in to cover it, avoiding potential liability issues for you.
The last thing you’ll want to look at is your own personal liability coverage. You’ll want to make sure that you are carrying the maximum amount of liability coverage on your auto and home insurance, since your risk for being sued increases. You may also need to look at an umbrella liability policy for additional coverage.
This may sound complicated, but we can make it very quick and easy! Schedule an appointment today and we’ll look at all of your needs as a new landlord.