Many people don't plan on being landlords, but accidentally become one anyway. Maybe you let someone live in the in-law apartment at your primary home. Maybe you decided to rent out your lake house or second home as a vacation rental. Maybe you've even turned a home into a full-time tenanted property. In these situations, the insurance situation can get a little fuzzy. It's important you know how to protect yourself now that you've become a landlord.
Let your agent help you
Having a tenant on your property can be a financial liability to you. If they get injured on the property, for example, they may be able to hold you financially responsible. Do not assume that your homeowners policy will cover your liability. Your homeowners policy may have specific exclusions relating to renters. Your carrier may even cancel or refuse to renew your insurance if they find out you have a tenant they didn't know about. You may need a new policy altogether, depending on how often your building is tenanted and whether you live in it or not. The last thing you would want is for a claim to be denied or for your policy to be non-renewed or cancelled because information was not provided. Avoid problems, by being open and honest with your insurance agent about your tenants so that you can get the right coverage for your situation.
Coverage varies carrier to carrier
Some companies allow the rental of a property up to a certain number of weeks per year. Others do not at all. Read your policy carefully to see what your carrier will and will not allow. It may be that there is another company with a similar price that better fits your situation. Your agent is, again, your best resource here.
You may be carrying coverage you don't need
Take a look at your policy. Chances are, if you're a regular homeowner, your personal property is covered from between 50% and 75% of your home's replacement cost. If you don't furnish your tenanted property, chances are this is more coverage than you really want. Ask your agent about a dwelling fire policy
Your current policy may not cover lost rent
A basic homeowners policy will cover loss of use to a certain percentage of the home's replacement cost. This is to ensure that if you suffer a loss that renders your home uninhabitable, you and your family can afford a place to stay while repairs are made. What this does not usually cover however, is loss of rental income. Depending on how often you rent your property, this could be a significant hit to your wallet. There are homeowners products designed to allow you to tenant a property seasonally or year round, even if you live on the property.
Your tenant should have their own insurance
Let your tenant manage their own risk with a renter's policy. You're well within your rights to require that they carry personal liability insurance. These policies will also cover their personal property in the event of a loss. If you have a long-term tenant, you should consider making this a requirement of the lease.
We know the insurance details can be daunting. Call us to talk about your specific Houston home insurance situation so we can help find a policy that is right for you. Call 713-227-7283 today.