The first thing to know is that there are actually several different types of rental insurance. Choosing between them is determined by the type of dwelling you’re insuring. For instance, for a single-family home, you need a rental home policy.
Condominiums have their own type of insurance as well as apartment buildings. Condominiums in this area outside of the US may require a different kind of insurance.
While that may seem easy enough to choose which one is right, since you likely know the type of building you have, there’s actually more to keep in mind as you’re choosing.
So say you have a house that you plan on renting out. It’s a single-family home, but you can gain enough to offset extra maintenance, the mortgage, and additional insurance. You then need a rental dwelling policy which covers property damage, injury and liability claims, and loss of the income if the property is damaged by something covered.
That isn’t where the insurance coverage stops though. Your tenant also needs rental insurance. It’s important to stress to them that the insurance you have only covers damage to the property and not their stuff. If something happens to the dwelling, they need to cover their property with renters’ insurance as you aren’t liable for it.
It’s also important for you to note and make sure that you have additional funds. Just like your home insurance, the policy doesn’t cover everything. Some things to consider for fuller coverage is inflation coverage and the full replacement cost.
This insurance is for an apartment building and similar structures. While a house is certainly an investment, apartment buildings can bring in more income for the less overhead cost in many cases. However, because it is bigger, the initial cost to get started is often significantly more, making it even more important to insure it.
Just like the dwelling insurance, your tenants need their own renters’ insurance for their things, but apartment coverage offers you more customization and protection.
They often insure the full building and additional structures including garages, storage, clubhouse, pools, walls, fences, and much more, essentially everything on the property. It also includes comprehensive liability, potential loss of income due to damage, the breakdown of equipment, and more that you can customize for your needs.
This is the final type of coverage. It’s kind of like a combination of the dwelling and the apartment. There’s unique coverage required as the building itself isn’t owned by you, but the unit is. Like the other options, your tenant still needs their own insurance, but your coverage covers the structural things for your particular unit and offers other customization.