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Matt and Bethany, Charleston SC
LANDLORD RENTAL INSURANCE
Landlord rental insurance is one way of referring to the insurance coverage that property owners procure when they rent or lease their property to another person. It is also referred to by some people as let property, property owners, or rented property insurance. It is a type of home owners insurance that, in its standard form, provides protection against the financial fallout from the typical accidents or perils that could affect a home.
Once a person becomes a property owner and gets a mortgage to do so, the bank or mortgage company will insist on a certain minimum level of protection, such as condo rental insurance, of their interest in the property. They will require that the property owner carry coverage for the duration of the loan. Homeowners have a responsibility for the safety of the members of their household, and for that of any guests and visitors that may come onto the property. Ordinarily, the homeowner's coverage will apply to family members and guests. These are the persons who will most frequently be on the property. No extraordinary considerations need to be given to the general public.
When a property owner decides to put a property up for rent, however, a different set of protective and safety considerations come into play. Now, there are commercial considerations. The property owner now has to arrange coverage for the standard perils and risks such as fires, vandalism, accidental overflow of water, civil commotion, floods, hurricanes and other natural disasters, as well as issues peculiar to a rental property. For this, there is landlord rental insurance.
In addition to acquiring insurance protection against financial losses that he or she might suffer from the usual cohort of standard perils and natural disasters, the landlord now has a rental, and therefore a commercial liability. The landlord rental insurance policy can be purchased to offset and protect against the potential losses.
In addition, once the condominium, townhouse, or loft becomes a rental and begins to generate income, that income will need to be protected. The landlord rental insurance policy will need to include an income protection clause. This protection could be included as a clause in the policy so that if there is damage to the rental and the tenant stops paying rent for a period of time, perhaps until repairs are complete, the landlord will be compensated for all or part of the rent.
The property owner will do well to maintain landlord rental insurance to protect against financial losses above and beyond the protections provided by either the homeowners policy or the coverage that the renter provides. Landlord rental insurance could turn out to be significantly more costly than standard homeowners, even with the addition to that, of additional clauses and natural disaster riders. However, it could also protect the landlord from much more serious losses in the long run.
Standard landlord rental insurance provides coverage for the standard perils. It covers damage from windstorm or hail, riots, aircrafts falling the sky, freezing, and from artificially generated electrical current. If the property owner wants coverage against natural disasters, those will have to be purchased separately. Each natural disaster that is likely to occur in the region in which the home is located will require a separate policy or rider attached to the standard form contract.
Flood coverage is separate from hurricane coverage even if the hurricane causes a flood. Earthquake coverage is required if there is to be coverage for the effects of an earthquake, even if those effects include a fire. The insurer might very well cover the fire damage, but might choose not to cover any other damages unless the landlord has an earthquake coverage rider. Insurance carriers can be excruciatingly pedantic when they are called upon to cover claims, so it is imperative that property owners be sure that the specifics are clearly indicated in the landlord rental insurance policy.
The urgency increases exponentially when the house, apartment, condo, office, or retail space becomes a rental property for a student, senior citizen, or a young family. The risk of damage, accidental or malicious, increases when the number of people who will use the property increases. The landlord will want to get a policy to cover those things.
The bodily injury liability also increases, as does the likelihood that someone will file a suit, in which case, the landlord could find himself or herself facing legal action and its attendant high fees. If there is landlord rental insurance, the legal fees will be paid by the insurance carrier. Any judgments arrived at in court to the detriment of the policyholder will be covered by the insurer up to the maximum limit agreed to in the policy. A higher limit on that portion of the policy once the property is converted into a rental would be very much in order, except that it would bring with it a higher premium.