One product of the downturn in the housing market has been an increase in the number of people who have turned toward renting their home as a means of maintaining an income stream, to preserve equity or hold property toward future appreciation. However, becoming a landlord involves more than just collecting rent. If you are considering becoming a landlord, you have maintenance issues, landlord-tenant issues and laws that you must understand and respect. You also have insurance issues that require consideration.
Any property owner should have insurance to protect the property, any buildings or homes on the land and the contents of the home. If you have a mortgage, your mortgage holder is likely to require you to get some form of property insurance to protect against losses.
If you elect to become a landlord, there are special risks you need to consider that go beyond other property owners. You may face legal risks arising out of landlord-tenant disputes, risk of income loss if the property becomes unusable and other seldom considered risks. It is important to survey your potential risks and understand the types of insurance coverage that can protect you and your investment from all kinds of potential risks and losses.
The amount and scope of coverage is going to vary with your tolerance for risk, the rental situation and the value and nature of the property. Landlord insurance can be barebones or quite comprehensive.
There are five types of coverage you might want to consider when deciding to become a landlord.
Building Insurance – this coverage is for the structure or structures being rented. Make sure to consider all the structures on the property – like sheds – and purchase enough coverage to assure replacement in the event of serious damage.
Liability Insurance – If your tenant, is injured on your rental property and claims it was your fault because you didn’t fix a faulty hand rail on the steps, landlord liability insurance can help defend you.
Contents Insurance – Your tenant should get renters insurance to cover their property, but if you are renting a furnished property, your property needs to be protected.
Legal Expenses – Not all rental situations go smoothly. You can insure against the risk of legal costs of rental disputes, evictions, contract issues and similar problems with a tenant.
Loss of Rental Income– If there is a loss that damages your rental property, rental income coverage can help preserve your income stream while the property is replaced or repaired…
Your Washington business insurance agent can help you understand these coverages and suggest the insurance you need to feel comfortable in renting out your home.