Insurance Advisor at Oliver L.E. Soden Agency, Inc

Do Landlords Need Special Insurance?

Are you a new landlord? If so, you may have ended up in this situation accidentally. With the housing market still recovering, it’s not uncommon for homeowners to rent out properties they can’t sell. If you are an accidental landlord, you’ll need to review your homeowners policy right away. It’s likely that your current policy won’t offer the protection you need.


Talk to Your Insurance Agent


If you have a few renters throughout the year, such as for a vacation property, then your current homeowners policy should work. Still, we recommend talking to your insurance carrier to be certain. If renters are more than occasional, your current policy is not valid. When you don’t live in the same home as your renter, or you own another home that is rented out, you need another policy. Plain and simple.


When we say that your current homeowners policy won’t suffice, we are referring to the fact that claims will not be covered. Even if you are renting out your home for a few weeks out of the year, let your insurance company know. This way, if you do have to make a claim, everything is out in the open.


Types of Landlord Policies


If your home is being rented out for more than a few weeks, you’ll need a separate policy. Insurance companies have different names for these policies, but they generally fall into one of three categories:


DP-1 policy. Covers perils such as fire and vandalism. It’s a basic policy, but it offers some protection.


DP-2 policy. This policy covers slightly more than a DP-1 policy, including collision.


DP-3 policy. This special form policy covers most perils, unless they are specifically excluded.


Other Areas of Concern


Another thing to consider is coverage for loss of rental income. If your rental property needs to be evacuated for repairs, you can lose money by not having rent come in. Many landlords assume that they can make a claim for lost rental income, but this isn’t how it works. The loss has to be covered, and then you can make the claim. Also, talk to your insurance agent about having sufficient liability coverage, such as if someone slips and falls or gets an animal bite on your property. And, if there are parts of your home that are of concern, you can get a protective policy that offers specific coverage for equipment such as boilers and furnaces.