Is Landlords insurance much higher than homeowners insurance?
Home Insurance
Question by nena: Is Landlords insurance much higher than homeowners insurance?
in Philadelphia, PA..
I have my house rented and the homeowners insurance found out and now they are cancelling my policy. I did not even know there was such a thing as landlords insurance..
Best answer:
Answer by StephenWeinstein
Yes, it is. Tenants often do not take nearly as good care of the property as owners, for obvious reasons.
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Tags: cancelling policy, homeowners insurance, house rented, Landlords Insurance, Mortgages
It’s actually usually cheaper, for a single family home – see, you don’t need any contents coverage on it, and you might have your liability coverage elsewhere.
It doesn’t matter if a Rented Dwelling policy (as it is sometimes known) is cheaper or more expensive than a Homeowner’s policy. The fact of the matter is one type of policy will provide coverage in the event of a claim in your situation (Rented Dwelling policy) and the other will not (Homeowner’s policy). There’s no point in spending less money on something that will provide you with nothing when something happens. Either you purchase a Rented Dwelling policy or you move back into the house, occupy it as your principal residence and then you can purchase a Homeowner’s policy.
In the majority of cases that I have seen a Dwelling Fire Policy (the common name for this type of policy) is actually lower than a homeowners policy. It also has a major advantage in that it will provide coverage for loss of rental income in case of the house being damaged due to a covered loss, i.e. if you have a fire — your tenants will move out and therefore cease paying rent and this type of policy will replace that loss of rent.
Normally insurance will require that you have your primary residence insured with them first before they will write a Dwelling Fire Policy for you on your investment property. In addition many companies will require that if you do not live in the same area as your investment property that the property is managed by a professional property manager. To explain further — let’s say you moved out of your home, rented it out and moved into a condominium in the same city. To be able to purchase the Dwelling Fire you must have a condominium policy first with that company. If you actually moved to a condominium in another state, they would also require that the home be managed by a professional property manager or real estate agent. These conditions are usually required by the Underwriter.
So the first thing you should do is check with the Agent or Company that is currently insuring your primary residence. Hopefully they will be able to help you resolve this.
A couple of suggestions to help you keep the cost low and to make sure that you include sufficient coverage: a) get a $ 1,000 or even a $ 2,500 deductible on the policy, b) get at least $ 500,000 in liability coverage, c) make sure that you require your tenants to have renters insurance and that they name you as Additional Insured and provide you with proof via a Certificate of Insurance — provide your insurance company with a copy for their records. Renters insurance for your tenants will only cost them about $ 100 to $ 150 per year. If they have a renters insurance, it is advantageous to you because if they cause damage to your property such as a fire — their insurance will pay for the repairs and you won’t be out a deductible. They will also have numerous advantages — if there is a fire or even a burglary, their insurance will replace their personal property, they will have coverage for liability claims and if they have car insurance they might be eligible for a multi-policy discount.
I hope this information helps. Good Luck