Getting Better Homeowner’s Insurance to Become a Landlord

Caught by the real estate bug? Ready to jump right into getting real estate? Or perhaps you’re like millions of Americans that already have two homes and you desperately want to rent out your home to someone that could really use a home. Instead of fretting about all of the details, there are people you can outsource this process to. However, before you can turn over the heavy lifting to a property management company, you will need to make sure that you really do have the right amount of homeowner’s insurance.

Homeowner’s insurance isn’t just something that’s nice to have. If you’re going to carry a mortgage on a property, your lender is going to want to make sure that you have enough insurance to cover their investment as well. This is just part of the process of getting a mortgage. While in some rare cases you can skip your homeowner’s insurance, why would you want to open yourself up to that type of loss? If the worst happens and you were the victim of a fire or another mishap, all of your belongings would be gone — including the house itself. Homeowner’s insurance allows you to start from scratch.

When you become a landlord, one area that you will need to work on before any other is the realm of marketing; you need to make sure that your future tenants know that you are a person that has their safety in mind. Getting homeowner’s coverage to extend to your tenants isn’t difficult, but it does require taking a few steps.

First and foremost, you will need to look at your existing policy and really make sure that you truly do have the coverage that you think that you do. It can be tempting to assume that your insurance agent signed you up with all of the coverage’s that matter to you, but this isn’t true. In fact, if you are planning on being a landlord, it is possible that you could be voiding your homeowner’s insurance. This is why it’s always a good idea to call your insurance company to let them know your plans as well.

When it comes to your tenants, you will need to let them know that your homeowner’s insurance policy only covers the structure of the home — if they want their belongings to be protected then they will have to get renter’s insurance. Because they don’t own the home, homeowner’s insurance isn’t open to them. Yes, we know that sounds like common sense but we have definitely had some tenants that didn’t understand the distinction — yikes!

In order to make changes to your homeowner’s policy, you will also want to make sure that you take pictures of the way the house looks. In addition, if you haven’t had your home appraised recently, now would be a good time to make sure that the true value of the home is represented.

One area that homeowner’s insurance can cover that you should know about is damages to your property that your tenants cause. Normal wear and tear is expected and you will need to simply handle those maintenance costs — the price of doing business. However, every landlord knows about tenants that truly trash and destroy a place simply because it’s not theirs — they can move out, so what do they care? It’s that reason why you might really want to think about getting your own homeowner’s insurance and stretching it to adjust for your new life as a landlord.

Is being a landlord difficult? It certainly can be — but you will need to simply stay focused on your goal — you’ll be okay in the end, but the time to act is definitely today!