You might have a second home that you’re renting out on an annual basis. If you own a second house, why not? You can make some money by getting tenants to live in the home. But that brings up an interesting insurance quandary – how do you insure a second home that you don’t live in, but that you rent out on an annual basis? It’s not like you’re insuring your primary residence because, well, you’re not living there. A tenant is. We’ll explain how to insure a second home that you’re renting out on an annual basis.
Wait – why can’t you just get normal home insurance for a rental home?
So, that might be the first question – is insuring a rental house the same as insuring a home? The answer is no, it’s not. And then the second question might be this – well, why can’t you get regular home insurance for the house that you’re renting out? It seems like it’s just insurance companies trying to make things difficult.
The answer is because it’s a different kind of risk. You living in the house that you own is a different situation than you owning a house that a tenant lives in. Because the tenant doesn’t own the house, they might not take care of it the same way that you would. You might take pride in that house, but that doesn’t mean the tenant will extend the same kind of courtesy.
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What kind of insurance do you need for a rental home?
You would need a dwelling fire policy to cover the house that you’re renting out. These policies are generally written on a year-long basis. It protects the house against losses like fire, hail, and wind. It’s a good idea to make sure that the policy provides enough liability coverage, too. (Of course, it’s always important to read the policy carefully so you know what it does and doesn’t cover.)
This policy is similar to your typical home insurance, but slightly different. As long as you have a tenant living in the house on an annual basis, you shouldn’t have too much trouble getting a dwelling fire policy because many different insurance companies write them.
Pro tip: Typically it’s a good idea to get your dwelling fire policy from the same insurance company that wrote your primary home insurance. Not only does this just make things easier, you might be able to get a better rate.
What if you have trouble finding a tenant?
If you’re having trouble finding a tenant for the rental house, that might be stressful. It’s important that you look at the insurance policy to see how long you can leave the house vacant while you’re searching for someone to live there. Typically you have a limit of 30 days that the house can remain vacant, so that at least gives you a little bit of a buffer while you’re looking for a tenant.
What affects the cost of insurance for a rental home?
There are a lot of different factors that can affect the price of insurance for your rental home. For example, the following can affect your insurance premium:
- Age of the home
- Square footage of the house (and the amount of coverage you need)
- Your credit
- Age of the roof
The rate you’ll get depends on the carrier you go with and what premium they offer. It could be more expensive than your primary home insurance, it could be less expensive. Or it could be similar to what you pay for your primary home insurance.
If you want to find out how much it will cost to insure the house you’re renting out, fill out our online form, give us a call, or message us on LiveChat. We’d be happy to help you get quotes for the insurance you need.
Talk to your tenant about getting renters insurance.
It’s a good idea to talk to your tenant about getting their own renters insurance policy. This helps protect their belongings from loss, and it also provides liability coverage for the tenant. You need to be upfront with them and make sure they understand that your dwelling fire policy does not cover their belongings. Everyone needs to be on the same page so there are no awkward moments where a tenant thought your insurance covered their personal possessions…and only finds out that it doesn’t after a loss.
Consider umbrella insurance.
It’s also not a bad idea to consider getting an umbrella policy to provide yourself with extra liability insurance. What if a tenant gets hurt on the property and sues you? Umbrella insurance can help provide coverage amounts that go above and beyond the liability insurance you have on your underlying policy.
Get insurance quotes for your rental house by filling out our online quote form, giving us a call, or messaging us on LiveChat.