Is Your Rental Dwelling Covered?
Remember that rental property you own?
Absentee landlords sometimes have an "out of sight, out of mind" perspective
toward their rental properties. Life is good when you're collecting that
monthly rent check. But things can go wrong, and before they do, you need to
minimize your financial risk.
Take your insurance policy. If you own a detached house, townhouse, or condo
rental property, you need a dwelling policy to protect you against fire and
other losses--even if you don't live there, according to the American
Automobile Association. If your rental property is financed through a
mortgage, you really don't have any choice in the matter because you are
responsible to the lender for carrying insurance. And we're not talking about
a one-size-fits-all, standard homeowners policy. A dwelling insurance policy
covers you for replacement or repair of a residential unit damaged by fire,
smoke, windstorm, lightning, etc.--and it's customized to fit your needs.
It's a little more expensive than a homeowners policy, but well worth it.
Some things to consider covering:
Remember, even if you're not renting it out, insuring a second dwelling may
still be a good idea. For example, if you still own your former home after
moving into a new one, you'll need a dwelling policy on the old place even
though you're not living there. And the summer vacation home needs to be
covered, although it can usually be insured under your homeowners
policy--unless you own it primarily as a rental.
- If your rental property is furnished and still has some of your stuff, add
personal property coverage.
- Liability coverage can be added to your dwelling policy, or obtained by
extending your homeowners insurance on your principal dwelling.
- Loss of income provision will cover you for lost rent if your tenant has to
move out during repairs.