A homeowner’s insurance policy covers many things, including not just the physical structure of the home, but also the contents of the home such as electronics, furniture, and more. A homeowner’s insurance policy is absolutely essential to protect yourself from being financially ruined by some occurrence beyond your control.
If a storm damages your property so badly that you can’t possibly afford to fix it in a timely manner on your own, homeowner’s insurance protects you by paying for damage to the home and its contents. But is homeowner’s insurance important for everybody who owns a home?
If you and your family reside in your home most of the time and consider it to be your primary residence, then a homeowner’s insurance policy is a must. Even if you live in a destination city and you rent your home out occasionally for festivals or sporting events, homeowner’s insurance is more than adequate to protect your home and your investment in it.
If you do rent your home out on occasion, make sure that your homeowner’s insurance policy includes coverage for visitors and guests so you can have the peace of mind that their belongings are protected while they’re staying in your home. Most homeowner’s insurance policies also include some type of liability coverage, so you are protected if your guests are hurt on your property due to circumstances you couldn’t reasonably be expected to control. If you do rent every so often, just make sure that this coverage is beefed up enough to provide reliable protection.
When to Consider Landlord Insurance
If the property in question isn’t your primary residence and you use it primarily as a rental property or investment property, a homeowner’s insurance policy might not be right for you. Instead, you should consider landlords insurance.
Landlords insurance is a different type of coverage designed to protect the interests of people who primarily rent their property out to tenants. Landlords insurance usually comes with greater liability protection, so that you are sufficiently covered if your tenants get hurt on your property. The coverage will likely include extra protection to reimburse you for legal fees or the cost of a lawyer to help defend you from tenant lawsuits.
If you’re renting out a property, you are obviously relying upon it for some kind of income. Insurance companies understand that not all landlords are real estate moguls with rent payments coming in from all over. Many landlords only own one or two properties and might still be paying the mortgage on them.
This is why some landlords insurance policies also have a type of coverage called Fair Rental Value Coverage. This type of insurance protects you if the property is damaged so badly that is cannot be inhabited. Where a normal homeowner’s insurance policy would pay for repair to the property as well as recoup you for any lost income that you suffer because you’re unable to rent it out. This protection helps you weather the rough patch until you can get tenants back into the house.
Do you currently rent out your property? Are you adequately covered with landlord insurance?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.