If you decide to keep your current home as rental property when moving to a new house, you will need to contact an insurance company to get a landlord insurance policy for your current home. A landlord policy is something needed when a person owns rental property, and here are three things to know about this form of insurance.
Why You Need a Different Policy
You may wonder why you wouldn't just keep the current coverage you have on the house, but it's important to understand that you cannot keep your current coverage. When you move out of the house and rent it to someone else, the risks change, and your current policy will not cover these. When you turn your family home into a rental home, you must switch the coverage to a landlord policy if you want to protect this home.
It Covers the Structure Only
One key difference between a landlord policy and a regular homeowner's insurance policy is the coverage each type offers. A landlord policy is a type of home coverage that protects the structure of the house only, whereas a homeowner's policy also includes coverage for personal belongings. If you rent a house out, you do not need to provide coverage for the tenant's personal belongings. You do need coverage, however, for the structure of the house because you own it.
Landlord Insurance Offers Additional Coverage
In addition to covering the structure of your house, a landlord policy also typically offers additional coverage. The main type of coverage you should have included in your policy is coverage against loss of income. Suppose a fire destroys the whole house. If this happens, your mortgage lender would still expect you to pay the mortgage payment on the house each month, yet your tenant might not pay you the rent since he or she would have to move to a new home while your house is being repaired.
With coverage for loss of income, your insurance policy will pay you each month for the rental income you are losing due to the tenant not being able to live there and pay you the monthly rental payment.
If you are planning on moving out of your house and renting it out to a tenant, you should contact an insurance company to find out how to get a landlord policy in place as soon as you move out of this house.
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