Robert moved from Richmond, Virginia to Leesburg and called me to update the mailing address on his insurance policies. I asked him what he was doing with his house in Richmond and he told me he tried to sell it but couldn’t get his asking price so instead he decided to rent the house.
Robert’s situation is very common and Robert like most people didn’t realize he needed a different type of insurance. Robert had homeowners insurance and thought that policy would provide coverage since he still owned the house.
Homeowners insurance is designed to cover sudden and accidental losses for primary and secondary residences. Homeowners insurance is not designed to cover rental properties. Instead, you need Rental Property insurance or Dwelling Fire insurance.
What’s the difference?
Rental Property insurance will cover the structure, other structures (fence, shed, ect.) and provide liability coverage. Most Rental property policies do not provide personal property coverage because your personal belongings are not in the house.
Renting a house presents a much different risk especially when it comes to liability coverage. As the owner of the house, if your tenant causes damage or someone is injured on the property, you are responsible.
Rates for Rental Property policies are generally less than Homeowners insurance unless you rent to students or this is the only policy you have with the insurance company. Insurance companies are applying deep discounts for package policies (auto + primary home + rental property) so make sure you check with your agent to see which option is best for you.
Tips to consider when searching for a quality tenant.
- Run a credit check
- Obtain references
- Require the tenant to purchase Renters insurance (HO4)
- Require a security deposit
- Hire a property management company (especially if you live out of state)
If you have questions leave a comment or contact us at (804) 320-2886. The Andrew Agency is an independent insurance agency serving clients in Virginia, Maryland and South Carolina.