Among the many things to remember when you rent out your home is that your homeowner's policy needs to be changed to a landlord or rental dwelling policy. At a class yesterday I met and talked to Finny Rajchel, a State Farm insurance agent. Here is what he told me:
Some people have errantly insured their rental property with a
homeowner's policy. This could be a GRAVE mistake. Here's why. While the
homeowners policy is less premium dollars, there are benefits to
insuring the rental under a "landlord" or "rental dwelling policy". A
loss suffered under homeowners forms provides "loss of use" or
additional $ for a homeowner to rent an apartment while their home is
being repaired. The homeowners policy would also pay for out of pocket
expenses such as dry cleaning, Laundromat, and even eating out. Those
benefits don't help when you don't live in the dwelling. The "landlord"
policy or "rental dwelling" equivalent to "loss of use" is "loss of
rents". That is to say, most "rental dwelling" policies will reimburse
the owner up to 12 months of "lost rents" while the dwelling is being
repaired due to a loss covered under the policy. Carry a homeowners
policy on a rental dwelling and it could cost you your investment. If
your mortgage on the rental dwelling is say $3000/month and you carry
homeowners policy. Your renters won't be paying you rent while the
property in uninhabitable. Something to think about. If you don't know
insurance, know someone who does!!!
Finny Rajchel, CPCU
State Farm Agent
630-932-0300
Finny@callfinny.com
Words to heed!
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