Rent Loss Insurance Guide For Landlords | Visio Lending
homeowners insurance basics
As a landlord, you’re probably already familiar with landlord insurance. If you’re new to the industry, homeowners insurance is coverage designed to protect you and your investment. keep in mind that it does not protect your tenant; they will still need their own renters insurance. With landlord insurance, your property will be covered and, in some cases, your rental income may also be reimbursed. learn more about renters insurance for renters coverage
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Reading: What does rent loss insurance cover
what is rental loss insurance?
rental loss insurance, sometimes called fair rental value coverage, covers a loss of rental income if your property becomes uninhabitable for a current tenant due to covered damage beyond your control. this could include a tree damaging the roof or a pipe bursting requiring extensive repairs. however, if there is no tenant on site when the covered event occurs, rental loss insurance will not apply.
Also, loss of rental income due to covid-19 is not covered by rental loss insurance. additional events that would not be covered are losses that require other specific coverage, such as hurricanes and floods. For example, if your tenant is displaced due to a flood, rental loss insurance can only be used if flood coverage is part of your existing policy. There are variations in different policies, so always work with your insurance agent to determine which events will and will not be covered.
Reading: What does rent loss insurance cover
rental loss insurance vs. homeowner’s insurance
Homeowners insurance is a very broad term that encompasses many coverages, while rental loss insurance is a specific category or add-on to some homeowners insurance policies. Typical homeowners insurance covers the cost of a damaged property, but not necessarily the loss of income from being unoccupied. Standard homeowners insurance can also protect the owner from liability in the event a renter is injured on the property.
standard coverage amounts
As with all insurance, standard coverage amounts may apply. Some insurers allow a specific coverage amount, such as $12,000 per policy, while other insurers will have a term amount, such as 12 months of sustained loss. check with your insurance provider for the details of your plan.
how much does rental loss insurance cost?
The cost of adding rental loss coverage to your insurance policy will depend on the company you select. However, according to the Insurance Information Institute, landlords policies typically cost 25% more than a standard homeowners policy, but have greater protections. the actual cost of coverage will vary, depending on a number of factors.
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steadymarketplace.com says: “In 2018, most homeowners reported paying between $800 and $2,000 per property in annual premiums for homeowners insurance. the cost of rental loss insurance typically accounted for one-third to one-half of this annual amount. Rental loss insurance has often been found to cost less when combined with other types of homeowners insurance.”
For more details, talk to a local insurance agent to determine what coverage you’ll need and what the cost of this coverage will be.
Reading: What does rent loss insurance cover
rental loss insurance options
There are many insurance companies to choose from for your homeowners insurance and each will have slightly different coverage options and benefits. most will offer some form of rental income loss coverage, either standard or as an add-on to your policy.
Here’s a look at three popular carriers and their owner rental policies:
state farm
state farm homeowners insurance has a wide range of coverage and includes rental loss coverage with your standard policy. According to the State Farm Rental Home Insurance website, “The State Farm Rental Home Policy covers direct and accidental physical loss to your rental home and your personal property located therein, depending on the coverage provided by your policy. “.
state farm rental home insurance coverage includes:
- housing coverage
- personal property coverage
- loss of rental coverage
- liability coverage
- homeowner protection insurance coverage options
- coverage of open perils or named perils
- extended home coverage
- premises liability coverage
- protection against personal injury lawsuits
- limited liability coverage options
- Additional valuable coverage options
- physical structures
- personal property
- fair rental value coverage
- inflation protection
- premises liability coverage
safeco
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safeco homeowners insurance is a great option for homeowners who want to customize and bundle their coverage. According to safeco’s homeowners coverage page, “we offer comprehensive loss of use and liability coverage for your residential rental property, including items like microwaves, refrigerators, and washers and dryers used by your tenants.”
safeco homeowners insurance coverage includes:
mutual freedom
Landlords insurance coverage offered by Liberty Mutual is an excellent option for landlords with multiple properties who want to customize or bundle their insurance coverage. According to Liberty Mutual, “Liberty Mutual policies are a good option for most homeowners. we cover homeowners who own up to 16 units…and we can add your llc as a named insured.”
liberty mutual homeowners insurance coverage includes:
Reading: What does rent loss insurance cover
do you need rental loss insurance?
So, do you really need rental loss insurance coverage if it’s not already part of your policy? if your lender doesn’t require it, then the answer really depends on you and your comfort level with risk. The insurance you have on your rental property could make all the difference in your success as a landlord when the unexpected happens.
Insurance protects you and your investment, and mitigates risk for you as a landlord. Rental loss insurance coverage can keep you afloat if you find yourself in a situation where your rental property becomes uninhabitable. this, in turn, can protect you from having to default on your rental property loan. visio lending is proud to be your trusted rental loan partner, offering you the tools and financing to succeed.
Contact us for your rental loan needs today
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