Posted on: 13 August 2019
Are you interested in slowly becoming a landlord by investing in properties that you will rent out? If so, you might currently be looking at a house you would like to buy as your first rental house to own. When you make this purchase, you will need to purchase a form of homeowner's insurance on the property, and here are a few things to know about the type of coverage you will need.
You cannot purchase a traditional homeowner's policy for this
The first thing to know is that a traditional homeowner's policy is designed for a person who owns a house and lives in the house. If you are buying a rental property, you probably are not planning on living there yourself. Instead, you are probably hoping to find a tenant to live there and pay you rent for it. If this is the case, you cannot buy a regular homeowner's policy for this home.
You will need a landlord policy
Instead of buying a regular homeowner's insurance policy, you will need to purchase a policy called a landlord policy. While this policy is similar to regular homeowner's policies, it is different, too, as it accounts for all the extra risks you have with a rental property versus a home that you own and live in yourself. With a landlord policy, you will have all the protection you need for the structure of the house. If a fire causes it to burn down, your policy will cover this. If a storm causes damages to it, your policy will cover it.
You will need to understand the limitations of a landlord policy
The other thing to understand is that a landlord policy has limitations. The first limitation is that it will not offer protection for the tenant's things. When a tenant moves in, he or she should purchase tenant insurance, also called renter's insurance. This type of policy would protect the tenant if a fire destroyed everything in the unit.
The second limitation to understand is that a landlord policy will not cover damages your tenant causes. If, for example, your tenant destroys the floors or walls in the unit, you would have to pay to fix or replace these things, as your policy would not cover this type of damage.
If you are about to purchase a property you plan to rent out, make sure you purchase the right type of insurance policy for the home, and you can do so by contacting homeowner's insurance agencies like Bishop Insurance Agency.Share