Stephanie Taylor Christensen
Renting out your home can be a wise investment idea, particularly if you’re seeking a way to hold onto your property until home prices climb. But whether you live in it or not, your home is one of the largest purchases you’ll ever make. When you decide to switch it from your place of residence to a rental property, it’s critical that you treat it like a business deal and get insurance that protects you and your investment.
Landlord insurance is liability coverage designed to protect a homeowner’s investment while renting to tenants. It provides property insurance coverage for any physical damage caused by fire, lightning, wind, hail, ice, snow or vehicles. It also offers coverage for any personal property you may leave on site for maintenance or tenant use, like appliances, lawnmowers, landscaping tools and snow blowers, according to the Insurance Journal.
Keep in mind that for protection from flooding or sewage backups, you’ll need to add a rider onto your landlord insurance policy. MetLife, for example, allows landlords to obtain coverage for backups and runoff from sewers, drains and sump pumps.
The coverage also will help protect the landlord from liability if renters or their guests get hurt on the property (by slipping on ice-coated stairs, for example). Some insurance providers also include coverage for legal fees on landlord insurance policies, in the event that you’re sued for a covered claim. Additionally, Allstate recommends getting medical expense coverage so that you’re protected for medical payments up to a certain amount if someone is injured on your property and you’re deemed responsible.
Try as you may to maintain your home, accidents do happen. As a landlord, property that is not rentable can lead to financial hardship. After all, you’re still the homeowner responsible for mortgage payments. For that reason, landlord insurance coverage also pays for lost rental income if a disaster (like a fire) temporarily makes your building unlivable. It will cover lost rental income while you return the home to a habitable condition for whatever amount of time is specified in your policy (for Allstate, it’s one year).