Sunday, February 17, 2008

Insurance on Rental Properties

First let me clarify that I am not licensed nor do I claim to have sufficient knowledge of the laws governing the insurance industry. I recommend you contact your insurance carrier or you can call my office and my staff will point you to a professional. My goal in this article is to help you determine what kind of insurance you need for specific types of rental properties.

Homeowners who have purchased a new condo in a resort or on a golf course may believe their Home Owner Association (HOA) dues cover their insurance. This is a common mistake with any property that has a HOA and a Homeowner has to pay HOA dues. Most HOA fees do have policies that cover exterior of your property, but these policies do not cover your personal liability in your property and the interior contents.

As a homeowner you should make sure you have at least 300k liabilty coverage. This protects you in the event something should happen to a guest in your unit. You should also have your interior contents covered. This type of insurance is commonly referred to as a HO6 policy, it covers liability and contents for rental properties.

Please contact your insurance provider for details on HO6 coverage amounts. You should also discuss what your HOA exterior policy may or may not cover. Be sure you know the difference between wind and water damage if you own a property close to the coast.

Rental houses and other free standing structures such as a duplex, that are not affliated to Home Owner Associations require insurance policies similiar to the one you have on your home. The physical structure, exterior, interior and liability issues all affect your coverage. Make sure you describe in detail the structure(brick,wood,etc),age of the property,amenities(pool, fencing,etc) and purpose of your property. Your agent should know whether it is a long term rental, second home, or a vacation property to insure you have the proper liabilty coverage. Sometimes you can include your rental property under an "umbrella" policy which can cover your home, vehicles and rentals properties.

I often get asked about renter's insurance, as a property owner you are not required to provide renter's insurance. Renters insurance is for the renter, and it covers their items and they have the option to purchase it. They are not required too. I encourage my tenants to purchase a renters policy. It covers thier personal property, provides liability coverage and is relatively inexpensive.

I hope this article helps you determine your insurance needs. Remember that the insurance industry is constantly changing and may be different in other states. Please contact a specialist in the field for specific policy details and requirements.

Thanks for reading my article and please be sure to contact me with any questions you may have about the Rental industry.