Rental property can be a lucrative investment, but finding the right insurance policy is important to protect it from liability.
If you occasionally rent out a room in your primary residence, then homeowners insurance might work for you, but if you’re renting your house, a vacation home, or other investment property for an extended period of time, then we highly recommend purchasing landlord insurance.
Landlord insurance is designed to protect your property during occupancy. In contrast, homeowners insurance will not cover many losses incurred while the home is rented, and the property must be your primary residence to qualify for homeowners insurance.
When looking for the best insurance policy for your rental property, it’s important to understand what is covered in a basic policy. Here is a quick list of the basic protections you’ll get from your landlord insurance policy.
BASIC LANDLORD INSURANCE PROTECTIONS
Property coverage from named perils such as fire, flood, or snow
Coverage for additional property structures (i.e. garages or sheds)
Coverage for property maintenance tools like lawnmowers or gardening equipment
Landlord liability coverage in case a tenant or one of their guests is injured on your property (can include medical bills and legal fees)
Coverage for loss-of-rent in the event your property is damaged by a covered peril and undergoing repairs. This can include reimbursement for lost income. However, make sure to ask your insurance provider if there’s a lapse in coverage if the property sits vacant, and if so, for how long. This is important to know because some policies will terminate if the property sits vacant for too long.
This is only a basic list. There are many different policies that will tailor to your specific needs. For example, if your rental property has a swimming pool or playground, then you might consider a policy designed for additional risks.
LANDLORD INSURANCE IS IMPORTANT
According to the Insurance Information Institute, landlord policies generally cost around 25% more than homeowners insurance to account for the increased coverage. Although there is a higher cost, it’s worth it. Especially if you are a DIY Landlord and not working with a Property Management company. If you’re not living in the rental home, or maybe even in the same city, you’ll have to rely heavily on your renters to let you know when a problem arises. This includes storm damage, water leaks, or other issues. Renters might not recognize when something needs your attention, and consequently, the problem could become worse from neglect. Landlord insurance will help lower your risk for lofty expenses.
WHAT ABOUT RENTER’S INSURANCE?
Landlord insurance covers the physical structure of your property and your associated financial investments, but it does not extend to the personal belongings of your tenants. This is where renters insurance comes in. Renters insurance covers the contents, or personal property, inside the building. Just as landlord insurance protects the landlord, renters insurance protects the tenant.The state of California does not require renters insurance. However, as a landlord, you can require renters insurance as a term for leasing--we highly recommend that you do. Requiring renters insurance will prevent messy and time consuming disputes from damages to your property and the renter’s belongings.
Here’s a short list comparing landlord and renters insurance.
Landlord v. Renters Insurance Coverage
It’s also important to note renters insurance is cheaper than landlord insurance. In California, the average rental insurance policy costs $195 annually.
For more information about renters insurance in Escondido, here is a detailed list of different insurance plans by Safe Butler Inc.
If you’d like more information about insurance options or have questions about finding the policy that’s right for you, talk with a local insurance provider or give us a call. We are happy to help!
John Boruff, licensed real estate agent and managing broker, is the founder and president of Palomar Property Services. John’s experience in property management and real estate goes back to 1984, when he began leasing and managing multiple properties, including warehouses, small manufacturing plants and office buildings. He ventured into the business of residential property management by purchasing multiple single-family homes in the Oak Hill development of Escondido in 1990. John’s investment experience spans as close to home as Escondido, CA, the greater San Diego County region, and as far as St. Louis, MO. A talented negotiator, he can navigate even the most challenging real estate transactions with an intuitive ability to close the deal.
John has consistently served real estate investors with the highest level of property management services for over 12 years, and at Palomar Property Services, John and his team of licensed agents have become a one-stop, full-service real estate company. With customer service, efficiency, and state-of-the-art technology a priority to John, and combined with his extensive real estate knowledge, Palomar Property Services is second to none in San Diego County.
John consistently shows an unparalleled work ethic, earning him respect among both regional and local realtors. Throughout his professional life, honesty and integrity have been the building blocks of John’s success in his careers, resulting in one of California’s most premier property management companies.
