Standard home insurance policies are unlikely to be suitable for both landlords and tenants alike. Indeed, not disclosing that the property is being let out could result in cancelled policies and unpaid claims.
The landlord’s insurance covers only the property and the rights of the landlord, and therefore tenants should seek rental insurance quotes to obtain a policy for rental contents insurance to cover damage to, or loss of, their belongings or of another person’s property within their residence. Policies provide liability coverage and many policies also cover against the eventuality of legal expenses also.
Landlord rental insurance is designed to protect the landlord against circumstances which prevent them from using their property to earn an income. When a landlord obtains a rental insurance quote, there are different options open to them. Apart from the basic rentals insurance covering the building, rental guarantee insurance is available to protect the landlord against the tenant defaulting on their rent.
In addition, a policy geared to the needs of a landlord can cover the property for when it is empty, and also cover its contents, whether it is fully furnished or not. Coverage can also be obtained for any legal disputes that may occur between the landlord and tenant, including eviction, so that the landlord can be compensated for any related legal fees.
The landlord should seek cover for instances where the property may be damaged by the tenant. If it is damaged to the extent that it is inhabitable, the insurance can help with repair costs as well as loss of rent during the rebuilding or repair.
The cost of the policy can be reduced by selecting actual cash value for losses rather than replacement value. With cash value, compensation is only received after depreciation is subtracted from the current value of the property. A replacement value settlement, however, covers the cost of replacing the damaged property without considering any depreciation.
Landlord’s portfolio insurance is available for landlords with more than one property, and as well as only having one renewal date to worry about, there may be a hefty discount when compared to insuring each property individually.
For both tenant and landlord alike, it is important to carefully check the wording of the policy to understand exactly what is and what is not covered. For example, coverage may be limited to damage of the interior or exterior of the property, and a vacant property may only be covered for a limited number of days.
By Ben West