What coverages can investors get through rental property policies?
Rental property policies can come with various coverages, and most investors choose policies that combine several coverages together. Some of the more notable coverages that policies may offer are:
- Rental Liability Coverage, which could cover lawsuits that result from accidents involving tenants or their guests
- Commercial Property Coverage, which could cover both primary and secondary buildings against damage or loss
- Commercial Contents Coverage, which could cover appliances, HVAC equipment and furnishings against damage or loss
- Rental Guarantee Coverage, which could cover some or all lost revenue when tenants don’t pay for extended periods
- Loss of Income Coverage, which could cover some or all lost revenue when a property is unrentable following a disaster
- Legal Assistance Coverage, which could cover attorney costs and court fees associated with non-liability lawsuits
Investors who have vehicles that are used exclusively for work also may need commercial auto coverage, which is generally used to insure work vehicles. Commercial vehicle coverage is a common feature in multiple rental property insurance policies, and usually can be obtained through any rental property policy.
An insurance agent who specializes in single and multiple rental property insurance policies can help investors find a policy that has the coverages they need.
Do rental property policies extend coverages to tenants?
The coverages included in rental property policies typically extend only to investors, and not to tenants. Tenants may purchase their own renters insurance policies.
How are rental property policies and home insurance policies different?
Rental property policies and homeowners insurance policies are similar in that they both generally protect a property and its contents. Beyond this, however, the policies largely diverge.
Most rental property policies provide different coverages that protect against lost revenue. Homeowners insurance policies are unlikely to have rental guarantee or loss of income coverage, for example.
Most homeowners insurance policies provide personal liability coverage, which may cover legal costs associated with a host of liability lawsuits. Although rental property policies usually have rental liability coverage, this usually is limited to property-related lawsuits. It’s not the same as personal liability that protects against non-business risks.