Renting out a property as a vacation rental is a business, and, as in any business, it comes with certain risks. Your tenant can break your new stove that you just put in to attract the gourmand tourist. A pipe can burst, leaving you with a soggy floor and an unhappy renter. There is no cure for the stress of these situations, however the financial aspect of them can be eased by having the right kind of insurance.
Landlord insurance is different from homeowner’s insurance in that it is often more comprehensive. It will cover personal property that the landlord puts in the rentals for the tenants to use. Say you furnish your rentals with beds and couches and your tenant’s kids jump on them, ruining the springs- landlord insurance should cover that. It will also cover your property against the usual disasters such as floods and earthquakes.
But it can be more than that. Landlords face the problem of losing income if their home is damaged, so this type of insurance frequently comes with the option of coverage for what you would have gotten by renting the home out for up to a year if something happens to the house. Perhaps more importantly, it can also cover legal liability. If you spring for this option, the insurance will cover the costs of battling tenants who take you to court.
As you can imagine, there are some limits to what landlord insurance applies to. As an example, the building you are renting out has to be one structure, such as a townhouse or a single family dwelling, and not take in more than 4 families at a time. (If it holds more than 4, it’s an apartment building and that is a whole other can of worms.)
Then there is the insurance that your tenant should have. Homeowner’s and renters insurance focuses more on the things that a renter brings to the vacation rental. Most people bring a few items with them that they spent quite a bit on and renter’s insurance is a safeguard against those favored things getting damaged or lost. Landlord insurance won’t cover those items, but you can ask if a potential tenant has renter’s insurance. If they do, it can make it more likely that, even if something bad happens to their private property during your tenant’s stay, they will feel good about their time at your property.
Where Do You Find This Insurance?
Finding the right landlord insurance for your rental property is all about communicating with your insurance provider. Since it covers more, it can be a little more expensive than simple homeowner’s insurance, and there are a couple of factors that will change the price. Your credit score, location, claim history and building type can all come into play, so you want to shop around and talk with your broker to figure out what your particular property needs.
There are some websites that provide quotes from a variety of companies, such as Hawaii Landlord Insurance Qts, but many insurance companies that provide home insurance, such as State Farm and Farmers, can also accommodate landlord insurance.
If you are renting out a vacation property, insuring it against future mishaps is a smart move. Be sure to discuss it with your insurance carrier.