Clayton Sanders

5 Best Insurance Coverages for Your Rental Property
by Clayton Sanders

You’re probably familiar with getting homeowners’ insurance for your primary residence, but how are you covering your rental properties?  Just because you got a great deal and paid cash doesn’t mean you should ignore the potential losses that could occur should something happen.  These are the five coverages you need to make sure you have now.

Liability Coverage.   The house itself isn’t the only thing you should be covering.  You need to cover your liability for any accidents that occur on the premises.  If someone trips and falls on that crack in the sidewalk that popped up this winter, you aren’t going to want to pay for a broken arm out of pocket. That’s only the beginning of things you could have happen on the property that you could be held accountable for.  

Dwelling Coverage.  This one is obvious. If you buy a house, you want to make sure you can pay to rebuild or repair it to the same like kind and quality.  The perils that are covered in the policy typically depends on how much you’re willing to pay. You can choose to cover only major catastrophes, like fires and tornados, for a smaller price or you can opt for a more comprehensive coverage that covers many more issues.

Loss of Rental Income.  Owning a rental property is a business, and hopefully, you’re making some money from that business.  Coverage for the loss of rental income may help you if the home is damaged by a covered peril. If the home had enough damage from a tornado or fire that the tenant had to move out and rent stopped coming in, you could be reimbursed for your loss of rental income.  If you depend on your rental income to maintain your lifestyle, it’s a handy coverage to have.   Depending on the extent of damage, it could take months to make the property habitable again after a loss.

Landlord Personal Property Coverage.   Did you agree to rent out your property furnished with some things from your grandma’s old house?  Did you leave the refrigerator and washer/dryer combo since you’re renting to a friend? Even if the tenant has renter’s insurance, it’s not going to cover any personal property you may have left for their use inside of the home.  You’ll want to make sure you have sufficient landlord personal property coverage for any items in the rental owned by you.

Vacancy Coverage.  If you’re rental is going to be vacant for any period of time, it’s likely you’re going to need vacancy coverage.  A vacant home presents many more unique risks than a home occupied by a tenant. Things to make sure you have coverage for when the property is vacant includes: vandalism, water damage, and burglary, in addition to the major perils like fire. If you already have a policy for your rental property, talk to your agent about limitations in your current policy and supplementing it with vacancy coverage until the home is occupied again.

Having a comprehensive landlord’s policy is key to protecting your investment. It can’t be replaced by a regular homeowner’s policy or the tenant’s insurance. (However, it’s still wise to require that your tenants provide proof of insurance for their personal contents and liability). Reading policy language can be difficult, but knowing the right coverages to look for and finding a great agent to service that policy can make all the difference.




Clayton Sanders
Clayton Sanders is a real estate enthusiast and Brand Ambassador for Transactly living in St. Charles, MO. Clayton spends his time researching real estate trends, and the implications of NAR data on the current US housing market. Clayton credits the foundation of his real estate knowledge to Worth Clark Realty.


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