Published: January 2015
Q: I'm a new landlord. Will my homeowners insurance provide coverage if I don't live in the home?
A: Likely not, says Blake Doten, an Allstate agency owner in Yuma, Arizona. When you own a home that you're renting out for an extended period of time, your homeowners policy will likely no longer offer coverage, Doten says. "You'll need a separate landlord policy that will recognize the fact that you now have tenants," she explains.
Because renters present the potential of property damage, unpaid rent and other scenarios, Doten recommends landlords mitigate their risk by vetting prospective tenants with background and reference checks.
"Do your due diligence," she says. "It can be difficult to have to keep renting your place out to find the right person. You want someone who will care about the property like you do."
You can also help protect yourself by suggesting tenants obtain their own renters policy, says Doten.
So, landlord insurance for you, and renters insurance for the tenant? To understand why two policies are your best protection, it helps to understand how insurance works. When a pipe bursts, for instance, a landlord policy will likely kick in to cover physical damage to your property (flooring, walls, etc.), Doten says. It would typically also offer coverage for appliances, yard tools and other property you own that is left on-site for maintenance or tenant use, according to the Insurance Information Institute (III).
But property that your tenants own, like couches, clothing or other personal possessions normally aren't covered by your landlord policy, which may open you up to risk in this scenario, Doten says.
"If the tenants didn't have a renters policy to cover the damage to their own property, they could very well try and go after you for compensation," she explains.
While landlord policies typically offer liability coverage that could kick in to help protect you in such a scenario, Doten still recommends that landlords make renters insurance a requirement of every lease, to help avoid such disputes in the first place.
"It's protection for the renter and protection for you," she says.
Another key to a landlord policy is the fact that it recognizes that you have income coming in from the tenant. If there's a fire or another covered event that makes your property un-rentable for a time, a typical policy would provide coverage for that lost rent, Doten says.
"If you're not getting paid from your tenants because they can't live there," Doten says, "that can come at a very big cost."
Maintenance can also be an important way to prevent further troubles. Minimizing tripping hazards by repairing sidewalks, for instance, or servicing air conditioners, aging pipes, or leaky roofs not only keeps up the value of the home, it keeps tenants happy and protects them against potential injury or property loss, Doten says.
"These are all common things that can be avoided if you keep up," she says.
Of course, even with landlord insurance and your best efforts, you still may face unexpected risks. If you're between renters, for instance, you should take extra measures to protect your home. Be in contact with neighbors, don't let mail collect in the mailbox, have lights on periodically, and, if a neighbor has a car, ask them to park in your driveway, suggests Doten.
"These are all things that can further protect your home," she says. "Any sign that it's vacant just kind of screams, 'destroy me.'"