The time has come to upgrade. You are ready to move into a larger home may be to start a family, have a yard, or to use your condo as a rental property. Whatever your reasons for moving out of your condo and into a new home, you'll need to know how to insure it.
An independent insurance agent is a key advisor when it comes to know how to insure your condo-turned-rental property. With the right agent, the transition can be painless and even pleasant.
What Is Landlord Insurance and How Does It Apply?
Whether you realize it or not, you are about to become a landlord. When you transition from living in your condo to renting out your condo, you have stepped into landlordship. Your current condo insurance will not do as there is other protection that you will need in order to have proper insurance on your rental condo now.
Currently, you should have what is known in the insurance world as an HO-6 policy form, aka a condo policy. This is the same as a homeowners policy or HO-3 policy form except it does not provide coverage for the outside structure itself because the HOA is responsible for that. Typically the HOA's master insurance policy will cover from the studs out and your condo insurance policy will cover from the studs in.
What Does Condo Landlord Insurance Cover?
Now that you know what landlord insurance is, the next thing is what it will insure since you're a landlord. If your condo is being rented to a longer-term tenant, and this means anyone occupying the home for six months, twelve months or more, then the insurance policy will cover the following:
- Personal liability: This is financial protection for you as the landlord. Should the tenant decide to sue because of property damage or bodily injury that you may or may not be responsible for, then this insurance will protect against that.
- Loss of use: If you are unable to rent out the condo due to a covered claim, then this coverage will provide partial rental income to help pay the mortgage.
- Contents insurance: if you have any contents like appliances or furniture that remain in the condo while being rented, this coverage will respond to cover those items in the event of a claim.
- Dwelling insurance: This is not like a single-family or stand-alone home dwelling coverage in the sense that it will not be covering the outside of the structure. But it will provide coverage for materials from the studs in such as drywall, flooring, cabinets, etc. that would not be covered under contents coverage because they are considered structural.
- Theft and vandalism: This coverage will provide financial reimbursement or aid in the event of a theft or vandalism loss.
Insuring Your Condo as a Short-Term Rental
Option number two if zoning allows for it, is to rent out your condo as a short-term rental aka Airbnb. All the same coverages would apply except there may be additional coverage for theft and vandalism as well as higher content coverage because the condo is now fully furnished compared to a long-term tenant.
The other aspect you should speak with your independent insurance agent about is the turnover of tenants. Since your condo will now be a high traffic area with a variety of short-term renters from week to week and month to month, not to mention vendors like cleaning companies, then it may be a good idea to up the coverages all around making sure you've got enough coverage for the long haul.
Insuring Your Condo as a Vacation Home
Option number three is to keep the condo for yourself and utilize it as your vacation home known as your secondary home. A secondary home, as it applies to insurance needs, is to be occupied less than your primary home usually capping out at five to six months annually. Let your primary be your primary and your vacation home be your getaway.
The coverage for your secondary or vacation home is the same as your regular homeowners policy except it will likely be close to double the premium and should have higher theft and vandalism limits. Your independent insurance agent can get all the details figured out so be sure to reach out to discuss your condo insurance specifics.
What's the Cost of Condo Rental Insurance?
Costs vary, don't they? From person to person and product to product, insurance is no different. It's best you start thinking of insurance like you would your fingerprints, they are unique to you and one of a kind. And while the policy coverages may stay close to the same, each person is different, has different variables and claims histories making for different premiums.
You can estimate that whatever you were paying for your condo home insurance while it was still your primary home you will now be paying close to double in most cases as your rental or vacation property. This is simply because the risks are changing. The insurance company has to not only account for you and your history, but now for your tenants' history and exposure.
Benefits of an Independent Insurance Agent
Independent insurance agents have access to multiple insurance companies, ultimately finding you the best coverage, accessibility, and competitive pricing while working for you. Find an independent insurance agent in your community here.
TrustedChoice.com Article | Reviewed by Candace Jenkins
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