My name is Tia Vincent and I'm the broker and owner of Roundtable Property Management and today we're going to discuss the five things that you need to look at with your insurance policy when converting to a rental home.
- Number one, you're going to want to make sure that your insurance policy and the company know that you are no longer living in the home. You want to make sure that they are allowing it to be tenant occupied and you want to make sure that the policy covers not just the tenants, but any guests that the tenant brings into the property as well.
- Number two, you want to have a high amount of liability insurance. I typically recommend over five hundred thousand. Anyone in this day and age can sue anyone for any reason. It's important that you keep yourself covered. I have experience where a homeowner has been sued because the tenants sister came over at 2:00 a.m. and tripped and broke her ankle and sued because the carpet was loose. The carpet wasn't loose, but the insurance still paid out just to get rid of the case.
- You want to make sure that your policy covers loss of rent. If something happens like a fire or a flood, that requires the tenant to move out, you want to make sure that you are still going to be able to get the income coming in from your insurance company while you're doing the rehab to get it back rent ready.
- The fourth thing to look at is whether or not your policy allows for pets. It is said on average, there's about 75 percent of tenants applying for properties have a pet. If your policy does not cover pets, then you're cutting out 75 percent of your potential tenants.
- And last but not least, number five is hurricane insurance. You're going to want to look at your hurricane deductible. A couple years ago, we got hit here in Jacksonville with two hurricanes in a row, which was unheard of, and a lot of people found out by accident that their hurricane deductible was two to three percent of the home's value, not the typical five hundred to a thousand dollar deductible. So you need to look at the deductible. See if you can have it at around five hundred or a thousand dollars, and if not, maybe seek out a company that does hurricane deductible insurance where you can insure your deductible amount to a zero dollar.
If you have any questions about what type of insurance you need to have on your rental property or anything regarding property management at all. Feel free to give me a call. My number is below. My name is Tiea Vincent and I'm with Roundtable Property Management.