Investor · San Diego, CA · Member since 2020 · 50 posts · 31 votes
If I'm getting ready to move out and rent my property to tenants. How do you advice I proceed with changing from Homeowners insurance to Rental Insurance? Does my mortgage company need to get involved as well? Thanks
Usually the biggest difference is that home owner insurance covers the property and liability and rental insurance only covers the contents of your personal property (ie. furniture, etc.). You will probably want to retain your home owners policy. You should be able to get with your insurance provider and reduce the amount of coverage on personal contents to only cover your appliances, etc. since you don't need coverage on the tenants personal property (furniture, clothing, etc.). Your mortgage company will care about the coverage you have for liability and coverage on the home itself so don't change the coverage you have on those portions. However, I would recommend speaking with your Insurance provider as they are the experts in this area.
I think Dan is thinking of Renters Insurance which is for the tenant. You are asking about what kind of insurance you need when the house is no longer owner occupied. If it is a 1-4 family house then you need Dwelling Fire (some companies call it Landlord Insurance). That policy provides coverage for Building, Contents (if needed), Loss of Rents, Other Structures (if needed), Liability, and Medical payments.
Like Homeowners insurance the Building coverage should be Special form (aka All Risk) and should be based on the Replacement Cost. Even if you are not renting the house furnished, there are some Landlord owned contents there (non-built in appliances, lawn mower, etc) so you should have some coverage. The loss of rents is usually based on a percent of the Building limit. Make sure that the limit is adequate. Other structures coverage is for Detached Garages, sheds, fencing, etc.
As with homeowners, there are endorsements that can be added that increase the things covered. You should look into:
1. Personal Injury Protection (covers liability for Libel, Slander, wrongful entry, etc..) Important coverage for a Landlord to have
2. Ordinance & Law - If the building has to be rebuilt differently due to changes in the building codes
3. Service Line coverage - coverage for Utility, water and sewer lines outside the foundation.
4. Equipment Breakdown - coverage for mechanical breakdown of certain systems