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Boom In Rentals Boosts Market For Homeowners Insurance For Rental Property

By Mike Heuer


The housing crash of 2009 put many homes in foreclosure, which in turn created an opportunity for investors who bought vacant homes and have turned them into rental properties. The rise in rentals has many people searching for good rates on homeowners insurance for rental property.

Unlike renters insurance, which provides coverage for the people occupying a rental unit, homeowners for rental property protect the landlord as well as the actual building, fixtures, appliances, entryways and other aspects. Because the landlord does not actually reside in the building in most cases, the cost to provide home insurance building, walls, entryways, stairs and others will be protected with runs about 20 percent higher than with a comparable homeowners insurance policy for essentially the same building.

Also called landlords insurance, the policies are commercial insurance plans that provide more comprehensive coverage than standard homeowners insurance plans. Flood insurance generally is included, as it coverage for other natural disasters. Any furnishings and appliances provide are covered. And so are emergency services for getting repairs done quickly. If a water heater suddenly ruptures, the additional cost of getting it taken care of immediately, even if overtime is necessary to get it done on a night, weekend or holiday, will be covered by many policies that provide homeowners insurance for rental property.

There are many factors that impact the cost of such insurance plans. Rates vary based on the number of units within a building, the types of heating and cooling systems, the age of the building and its plumbing, wiring and other elements that can affect the building and lead to damage or destruction. If a landlord can show a rental unit will be fully occupied for the duration of the year, the rates will be lower. Just as insurers consider vacant homes to be a greater risk than occupied ones, they also consider vacant rental units to be greater risks since there won’t be anyone around to keep a nearly daily eye on things and could alert the landlord to any possible problems, like a ruptured pipe, leaking water fixture or other issue that could lead to a great deal of damage if it goes unchecked.

A home insurance building plan for landlords also will provide liability protection. If a renter is injured or killed by some mishap for which the landlord is deemed liable by legal courts, there likely would be liability coverage applied. An additional umbrella policy also could help to pay any legal fees, medical bills, court costs and settlements.

Most landlords plans for family homes that are being rented out are known as “dwelling plans” and generally come in three types. A basic type would cover common essentials, such as providing protection against fire, vandalism and other types of damages. Broader coverage to protect against windstorms, hailstorms and other types of perils is available with the next step of dwelling policy. The third level of a dwelling policy for rental properties provides open perils coverage and only excludes perils, such as external flooding or earthquakes in some areas, rather than names specified perils that are protected.