Rental Property Insurance
Rental Property Insurance Information
Insurance coverage for a rental home is very similar to a homeowners insurance policy. There should be coverage for the building, and the landlords property inside the home such appliances, garbage cans etc. If the home is furnished you will also need enough 'personal property' coverage to replace all the furniture. (PLEASE NOTE: A Landlord Insurance policy DOES NOT cover the personal belongings of the tenant.) There should also be liability coverage in high limits , in case someone gets hurt on the property. If you can get it, we suggest carrying personal injury liability sewer and drain coverage on the policy ....if you can get it.
Owning a Rental Home Has a Higher Risk of Insurance Loss
Because a renter does not 'own' the home, and does not have a 'vested interest' in the home, they are less likely to pay attention to needed repairs or to report them to the owner. This delay can eventually lead to the owner filing a claim on their insurance policy. Therefore a landlord can expect to pay a higher cost than a standard homeowners' policy. Also, the chances of the Landlord filing a claim for liability increases. A tenant is more likely to have risky behavior which might lead to someone getting injured on the property such as: fix cars in your driveway, throw wild parties, fail to shovel snow from the driveway and sidewalk in front of the home etc.
Short Term Rentals - Length of Lease Is Very Important to Determine Eligibility with a Carrier
Over the past few years, we have seen many more carriers enter the market to insure short-term rental properties. But, quite a few carriers consider this risk to be ineligible in their program, or they may require an 'endorsement' on the policy to provide coverage. The fine detail of the policy may exclude coverage on a home with a continuous occupancy of less than 30, 60, 90 days. Its very important for the landlord to make sure to tell the agent of the lease terms of the property and if the property will be listed on such sites as Airbnb, VRBO or any vacation rental site.
How to Decrease Chance of Filing an Insurance Claim
- Run a background check on each tenant, include eviction history in the report. There are many sites available such as: www.tenantbackgroundsearch.com
- Require the renter to purchase a 'renters insurance' policy with limits high enough to replace all their personal belongings 'brand' new AND high liability limits.
- Require each tenant to carry their own renters insurance policy, if they are not married
- Inspect the property regularly with drive-by's and write a stipulation in the lease that the landlord will enter the home at least quarterly to change the air filter and replace light bulbs. This will give the landlord the chance to inspect the property on the inside and make sure it's not being abused by the tenant or not housing unwanted pets.
- Maintain the property as if you (the owner) lived there.
Tips for Landlord to Protect Against Liability Claim
- Carry the highest liability limits you can on the Landlord Policy and purchase a liability umbrella policy for additional liability coverage. Injuries Happen!
- Require the tenant purchase renters policy to list the landlord as a 'named insured' on the policy. This gives the landlord rights to file a claim on the tenants policy.
- Maintain the property to avoid slips and falls or injuries to the tenant
- Do not allow the tenant to do repairs or maintenance themselves. You can liable for their injuries if they are doing maintenance and/or repair work to your property.
- Review Colorado State and Federal Laws and Regulations Regarding the Landlords and Tenants Rights to Fair Housing practices to avoid violating any existing laws.
Denver West Insurance Brokers is a local independent insurance agency on the west side of Denver in Golden Colorado. We serve the communities of Denver, Golden, Lakewood, Littleton, Morrison, Evergreen, Wheat Ridge, Arvada, Boulder, Lafayette and Westminster. All our staff are licensed and ready to answer any additional questions you might have and can search multiple carriers . We do the shopping for you. Give us a call, we are happy to help!