Are you a landlord renting property? Possibly you're renting rooms in your own home out. Either way, it's nice to have that rent coming in, especially if you've got a mortgage to pay off.
In the unfortunate case where your property is severely damaged and the tenants can no longer stay and pay rent, do you have the coverage necessary to get by while repairs are made?
You have the option to apply a percentage of the house limit to cover fair rental value with certain home insurance policies. Your insurance coverage will be completely used up if your home is damaged irreparably and needs to be rebuilt. The result is that the rent you are not receiving will not be covered.
If you had purchased rental income insurance, you would be grateful that you had made that decision. For example, if you're rental income is $20,000 per year, you can choose to purchase $20,000 worth of rental income insurance so that if it's a year to repair, you are covered completely.
Every landlord would be wise to get this type of protection. As with all types of insurance, though, you need to be aware of the exclusions and conditions. Here is an example:
Policies like this have something called "fair rental value" included in them, which means that if the rent you charge is $2,400, but the going rate for the area is $1,200, you will receive $1,200 each month for your rental income insurance payments.
Typically, you would only be covered for the time that is reasonably assessed for repairs or rebuilding of the property. When a rebuild or repair is completed in 6 months, but you do not rent the unit right away, you are only covered for the period of the rebuild, not the extra time after.
For landlords who would be severely financially devastated by losing their monthly rental income, it's strongly suggested that you get rental income insurance as soon as possible. Homeowners insurance doesn't offer you the coverage you need when renting out your home. Keep in mind that it will take a while for the repairs to be made. Building permits need to be obtained, you will need to find the appropriate contractors, and weather can also be a concern. Usually the repairs are going to take at least a few months. Sometimes, it is even 6 months or longer to complete. Rents that you regularly receive from your tenants will not be paid during this time, while repairs are being completed. After the home is ready to be rented again, new tenants will need to be found, and if it's 6 months since you've received rent payments, your financial situation could be dire. If there's a mortgage owed each month, the bank only has a certain amount of patience for late payments.
In the unfortunate case where your property is severely damaged and the tenants can no longer stay and pay rent, do you have the coverage necessary to get by while repairs are made?
You have the option to apply a percentage of the house limit to cover fair rental value with certain home insurance policies. Your insurance coverage will be completely used up if your home is damaged irreparably and needs to be rebuilt. The result is that the rent you are not receiving will not be covered.
If you had purchased rental income insurance, you would be grateful that you had made that decision. For example, if you're rental income is $20,000 per year, you can choose to purchase $20,000 worth of rental income insurance so that if it's a year to repair, you are covered completely.
Every landlord would be wise to get this type of protection. As with all types of insurance, though, you need to be aware of the exclusions and conditions. Here is an example:
Policies like this have something called "fair rental value" included in them, which means that if the rent you charge is $2,400, but the going rate for the area is $1,200, you will receive $1,200 each month for your rental income insurance payments.
Typically, you would only be covered for the time that is reasonably assessed for repairs or rebuilding of the property. When a rebuild or repair is completed in 6 months, but you do not rent the unit right away, you are only covered for the period of the rebuild, not the extra time after.
For landlords who would be severely financially devastated by losing their monthly rental income, it's strongly suggested that you get rental income insurance as soon as possible. Homeowners insurance doesn't offer you the coverage you need when renting out your home. Keep in mind that it will take a while for the repairs to be made. Building permits need to be obtained, you will need to find the appropriate contractors, and weather can also be a concern. Usually the repairs are going to take at least a few months. Sometimes, it is even 6 months or longer to complete. Rents that you regularly receive from your tenants will not be paid during this time, while repairs are being completed. After the home is ready to be rented again, new tenants will need to be found, and if it's 6 months since you've received rent payments, your financial situation could be dire. If there's a mortgage owed each month, the bank only has a certain amount of patience for late payments.
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