Insurance Considerations for the Inadvertent Landlord

Not everyone gets into the business of being a landlord on purpose. There may come a time when you find yourself in the position of owning property that you’re not occupying. Whether that’s a result of a slow housing market making it virtually impossible to sell your home, or out of a desire to make a bit of extra money from your unused rental home in Florida, there are many circumstances that turn ordinary homeowners into “inadvertent landlords.” If this describes you, you’re going to want to go over your existing insurance policy and maybe even price out several homeowner quotes from different insurers to guarantee that your rental property is adequately covered, if at all.

The First Thing
Before you even compare home insurance policies, the first thing you need to do is find out if your existing policy will cover your claims if you’ve got someone else taking up primary residence in your home. Most insurance companies won’t honor claims unless the policy holder is the person living at the property, and according to the fine print that you agreed to when you signed on, they can deny your request if they find out. This is why it’s imperative that you learn where you stand as soon as possible, before any damages occur and you’re left holding the bill. Contact your home insurance provider and inform them that you’re renting out your property, even if you already have been for some time. Be up front and honest about the situation and ask if your home will be covered in the event of damage. If not, you’ll have to explore your options to get your home properly insured.

Your Options as Inadvertent Landlord
Many insurance companies will require that you buy separate landlord’s insurance if you’re renting out your residence. Policies work the same way that regular policies work, and are usually not much more expensive. You’ll be given the option between three basic policies:
 

• DP-1 Policy: Basic landlord insurance, covering you for fire and vandalism.
• DP-2 Policy: Offers more comprehensive coverage against “named” perils, and includes additional acts of nature like windstorms and hail.
• DP-3 Policy: This covers all perils except for those noted, unlike DP-2 where the only covered perils are those specifically named.

Exceptions to the Rule
In most cases, the only way that you can get around having to buy a separate insurance policy is if you live there as well. This is seen more often in homes where owners rent out rooms to tenants on a monthly basis. This still requires that you make changes to your policy—by getting coverage for units rented to other people—but the alterations are minimal compared to having to have an entirely separate policy.

Compare Homeowner Insurance
Once you’ve ironed out all of the details with your existing insurance provider and have looked at everything from coverage to cost, it’s time to get homeowner quotes from other insurers. Not all insurance providers have the same rules in place when it comes to renting your property, and you may discover that you can save quite a bit of money if you compare home insurance policies and pick the one that suits your circumstance best.