Converting from homeowner to landlord insurance policy

Owen RosenBusiness Member

Professional · Clinton Township, MI · Member since 2015 · 678 posts · 259 votes

1y

Quote from @Salil Surendran:

Just rented out my primary residence and researching insurance coverage. Here is what I have learnt. Please do comment if wrong:

If you are not residing in a unit then a homeowner’s insurance will not cover anything. If there is any kind of damage to the house because of a natural cause if you approach the insurance company without a landlord's insurance they will outright deny your claim.
If you have a mortgage the bank will insist that you have landlord insurance
Tenant has renter's insurance. So if there is any kind of physical harm to the tenant say due to slipping on the stairs etc. the tenants renter insurance will cover the medical cost. It the tenant causes a fire and damages my house and neighboring houses then their renter's insurance will conver all the costs.
My HOA has insurance. So if there is a fire due to natural cause, HOA insurance will cover the cost of exterior repair like painting the exterior walls. My landlord insurance will have to cover the costs of fixing the interior like replacing carpet, interior painting etc.
I can completely give up on homeowner’s insurance and just buy landlord insurance?

1. If you have not disclosed how a property is actually being used - coverage is always in jeopardy

2. If you have a mortgage the lender will require you to have insurance that protects the asset that secures the loan

3. Tenants renters insurance does not cover medical expenses for the tenant

4. This depends on the HOA and the insurance. In general, if you have a typical condo unit the HOA insurance covers the exterior structure while your insurance covers the "studs in."

5. If you do not live in a property, you should not have homeowners insurance on it. You need some sort of insurance that covers non-owner occupied properties, whatever it might be called.

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Greg M.

Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes

1y

3) Renters Insurance: As already mentioned, renters insurance doesn't cover medical other than the generic $1K-$5K limit for others. Basically to cover their deductible.

Most renters insurance has a liability limit of $100K. Good luck fixing your and your neighbor's homes for $100K. Unless the total damage is under $100K, your policy is also paying out. Keep high liability limits.

4) HOA Insurance: Read your CCR and see what is covered. One complex I own in replaces up to the studs. I'm responsible for the drywall and everything inside. Another complex I own in will replace the kitchen cabinets and flooring in the units as they were originally sold with these items. It all depends.

OP

Member since 2018 · 6 posts · 0 votes

1y

Quote from @Nathan Gesner:

Quote from @Salil Surendran:

If your tenant starts a kitchen fire and the insurance provider finds out it was a rental, they will deny your claim.

Would you sue yourself if you fell down the stairs or found mold in the basement? Of course not! But a tenant may, so the insurer provides coverage for a rental that you wouldn't have in an owner-occupied home.

If a tenant starts a fire => As per my lease the tenant has to get liability insurance for $500k before moving in. So if a tenant starts a fire wouldn't the tenants insurance cover the cost?

If the tenant falls down the stairs => I do have umbrella insurance of $3M. Will this be useful?

Mold in the basement, cracks in water pipes etc. => Are normal repair costs also covered by landlord insurance? I understand that loss of rental income when the repairs are done is covered by landlord insurance.

NOTE: I have purchased landlord's insurance. I am asking these questions to better understand my insurance needs to make sure that I am not under-insured.

Greg M.

Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes

1y

500K is high and will exclude lots of companies from writing the renters policy. Many companies offer 300K max and above that they'd need an umbrella.

Liability insurance covers negligence. If your tenant falls down the stairs because they were clumsy, you're not liable. If a stair comes loose, you may be liable. Once your primary liability insurance is exhausted, your 3M umbrella would kick in.

Mold is being excluded by many companies. Some offer it as an additional rider for more money. For those with coverage, whether an occurance of it is covered would be based on how it occured and did/should you have knowledge about the potential for mold. Many companies are also limiting the claim for mold. You may have a 1M policy, but 25K for mold limit.

Cracked water pipe MAY be covered. Insurance companies are becoming stricter on things. If the pipe is 50 years old and had a life expectancy of 30 years, they're going to argue it was due to lack of care on your part and try to deny the claim.

Normal repairs are absolutely NOT covered by insurance. Those are out of your pocket. Loss of rental income is only covered if it is listed in your policy.

Owen RosenBusiness Member

Professional · Clinton Township, MI · Member since 2015 · 678 posts · 259 votes

1y

Quote from @Greg M.:

500K is high and will exclude lots of companies from writing the renters policy. Many companies offer 300K max and above that they'd need an umbrella.

Liability insurance covers negligence. If your tenant falls down the stairs because they were clumsy, you're not liable. If a stair comes loose, you may be liable. Once your primary liability insurance is exhausted, your 3M umbrella would kick in.

Mold is being excluded by many companies. Some offer it as an additional rider for more money. For those with coverage, whether an occurance of it is covered would be based on how it occured and did/should you have knowledge about the potential for mold. Many companies are also limiting the claim for mold. You may have a 1M policy, but 25K for mold limit.

Cracked water pipe MAY be covered. Insurance companies are becoming stricter on things. If the pipe is 50 years old and had a life expectancy of 30 years, they're going to argue it was due to lack of care on your part and try to deny the claim.

Normal repairs are absolutely NOT covered by insurance. Those are out of your pocket. Loss of rental income is only covered if it is listed in your policy.

A few notes from a licensed insurance agent:

$500,000 liability coverage on renters insurance is not difficult or expensive to get. Do some companies max out at $300,000? Sure, but again securing $500,000 isn't difficult.

That said, liability coverage is lawsuit protection coverage just like it is for you. There's no guarantee that the liability coverage will pay out unless the tenant is negligent, at fault, etc.

Mold is typically not covered by insurance at all. If it is covered it's usually if caused by a covered loss meaning mold develops due to some other covered peril. If you just randomly find mold in a property, it's highly unlikely any insurance will cover that. Just because you see a mold limit on your policy does not mean you have coverage for mold. It likely means you have that amount of coverage when caused by another peril and as mentioned it's typically a significantly lower limit than other coverage amounts.

If a pipe bursts, it will likely be covered. If you have a slow leak...coverage is less likely especially with aged plumbing.

To the original poster, Salil. These specific questions should be posed to the agent that sold you the policy. Every policy is different. A knowledgeable agent is invaluable. If you don't have an agent...well...nothing is a problem until it's a problem but our advice and opinions are meaningless if you actually need to use your insurance.

It's vitally important that you understand exactly what you have before you need it. Get things in writing if you're not comfortable with what you see or hear.

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OP

Member since 2018 · 6 posts · 0 votes

1y

By the way the landlord insurance that I applied to is Steadily. Anyone have an opinion about them. I got the below coverage for $80/month which looks good to me?

The coverage limits are as follows:
$200k -> Dwelling
Premises Liability -> $300,000 per occurrence
Medical Payments $500 per person / $25,000 per occurrence
Additional Living Costs And Fair Rental Value -> $19,000
Loss Assessment Coverage -> $1,000
Ordinance or Law -> $20,000 or 10%
Water Damage Limitation -> 10% ($20,000)

Deductibles
All Other Perils -> $2,500
Limited Theft Coverage -> $2,500
Water Damage Deductible -> $5,000

Mark F.

Rental Property Investor · Northern NJ · Member since 2019 · 672 posts · 677 votes

1y

Quote from @Salil Surendran:

By the way the landlord insurance that I applied to is Steadily. Anyone have an opinion about them. I got the below coverage for $80/month which looks good to me?

The coverage limits are as follows:
$200k -> Dwelling
Premises Liability -> $300,000 per occurrence
Medical Payments $500 per person / $25,000 per occurrence
Additional Living Costs And Fair Rental Value -> $19,000
Loss Assessment Coverage -> $1,000
Ordinance or Law -> $20,000 or 10%
Water Damage Limitation -> 10% ($20,000)

Deductibles
All Other Perils -> $2,500
Limited Theft Coverage -> $2,500
Water Damage Deductible -> $5,000

No one can answer you question as we don’t know where you are or the value of the home. Sounds good but what’s their reputation as well?

When I move out of my house hacks, I call my insurance broker and he moves my policy to a landlord one. For me, it’s usually about 25% more for the same home on a LL policy. I also never make claims.

OP

Member since 2018 · 6 posts · 0 votes

1y

Quote from @Mark F.:

No one can answer you question as we don’t know where you are or the value of the home. Sounds good but what’s their reputation as well?

My property is in San Jose, CA and would be worth about $1M and the above insurance is at the same level as my homeowners and costs a little more (about 7% more). I was wondering about the reputation of Steadily in terms of paying out claims.

OP

Member since 2018 · 6 posts · 0 votes

1y

I purchased landlord's insurance. So I can completely surrender the homeowners insurance right?

Owen RosenBusiness Member

Professional · Clinton Township, MI · Member since 2015 · 678 posts · 259 votes

1y

Quote from @Salil Surendran:

I purchased landlord's insurance. So I can completely surrender the homeowners insurance right?

Yes, you can't have both

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