I want to rent out my home. Are there insurance issues to consider?
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Asked November 29, 2011
If you own a home that is rented, you do not have to carry full homeowners insurance unless the home is still under mortgage and your lender requires you to do so. If you own the home, you can drop the personal property part of the insurance policy because the items in the home will not belong to you are and are not your responsibility to insure. For that, your tenants should purchase renters insurance, which gives them personal property insurance and personal injury liability coverage.
What you will need is a landlord's insurance policy which covers the structures and liability insurance on them. What that means is that the part of the insured property which belongs to you is protected against partial or total loss, and that you are protected against people who are injured on the property as a result of flaws or failures on the property, such as tripping over a brick in the sidewalk, or being electrocuted by faulty wiring.
This type of policy does not include loss of use coverage, which reimburses the person for being unable to use some or all of the property, one of the four primary parts of a standard homeowner's policy. Since your responsibility for the property ends at providing proper maintenance and making sure that all structures are safe, the loss of use responsibility falls to the tenants, because they are the ones who will be inconvenienced by the loss.
However, it would be a good idea to increase the limits on your personal injury liability coverage. Not only will that provide for more serious injuries and damages, it will also increase the protection against someone attempting to sue you for your assets. To get this additional liability insurance, you can either increase the limits in your landlord's policy or purchase an umbrella policy that provides liability coverage across all lines of insurance you carry which make use of liability insurance. For example, your home and the rental would have increased liability, along with your car.
Answered November 29, 2011 by Anonymous