Renting your property such as a home, basement or condo on long-term or short-term basis can be a great way to earn income while reducing the financial burden of mortgage. But, with perks come the risks. You must be aware of the risk exposure you face as a landlord so that you can cover yourself appropriately. Lack of the right insurance protection can land you in a financial crisis.
Basement Rental Insurance
Majority of people renting out their basement fail to inform their insurance company about the tenant because they rely on their homeowner insurance. If damage were to happen in the rental basement due, for example, to fire or water, the insurance company could consider your insurance policy voided for not having been informed of the tenant. To avoid this unfortunate situation, you can endorse your homeowner policy with “unit rented to others” coverage.
Condo Rental Insurance
The condominium ownership brings with it the complex responsibility to protect your contents, your unit and your share of the common property. As a condominium owner, you have title to your own "unit" as well as a share in common areas such as the swimming pool, lobby, parking garage or patio.
A lot of people take comfort in thinking that Condo Corporation’s insurance is part of their monthly maintenance fee and, as such, they are protected against all liabilities. The reality is that condo owners, not the condo corporation, are liable if, for example, a fire or water emanating from their unit damages nearby units. That’s why it’s important for you to insure that your tenant has proper insurance coverage that include liability and cover the costs for damage to other people’s property.
House Rental Insurance
If you are renting your entire home you will need to change the insurance policy to cover the property as a rental rather than an owner-occupied residence. As the landlord, your coverage is only on the structure itself and your financial interest in it. It protects you in cases where you can be found to be responsible for injuries or damages and helps you cover costs involved in lawsuits and pay damages in case of a judgment against you. Your tenant’s personal possessions are not covered under your policy. Requiring your tenant to carry their own insurance policy provide you protection from damages and lawsuits resulting from a tenant’s actions while providing tenants coverage for their possessions.
Do not rely on your homeowner’s policy if you are renting out your property.