So you want to be a landlord…
Owning a home is one thing. Owning rental properties is another. Here’s what you should know…
Insurance companies view your primary home differently than a property you don’t reside in. They realize homes inhabited by tenants are far more likely to have claims because less care is taken to maintain the home. Because of this, homeowner’s policies and rental policies are written and rated differently.
Many well-intentioned people buy a new home, move, and then rent out the home they just left without converting the policy. The customer now has two homeowner’s policies and one is not covered correctly! Ooops!
The proper way to insure a rental property is with a “dwelling policy” or “landlord policy”. Note, even if you don’t collect rent from the tenant, it’s still considered to be a rental property. Ultimately it comes down to who lives in the home.
If you own, or are planning on purchasing properties to rent out, make sure you notify your insurance agent.
Also, take steps to protect yourself and your rental property by following these steps:
- Know who you’re renting to! Perform background and credit checks on applicants and ask for at least two references (not including previous landlords).
- Contact their employer directly and get confirmation of their employment. Check stubs aren’t a reliable resource.
- Require the tenant to purchase renter’s insurance and ask for a copy to keep on file.
- Be a “hands on” landlord. Complete regular inspections of the property to identify any potential problems.
- If you are between tenants, help to avoid vandalism by changing locks and keeping doors and windows locked.
- Keep up maintenance on the home to help avoid damages and future claims.
- Carefully choosing tenants and being prepared and thorough will save you time and money in the long run.