Do you own a property which you rent out? Possibly you're renting rooms in your own home out. The rent payments can make a big difference to a landlord, and if you've got a mortgage, it may be very important.
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?
Some home insurance policies allow you to apply a percentage of the limit on the house to cover the fair rental value. But if the whole house is destroyed, all of the coverage will likely be needed to rebuild the home. The result is that the rent you are not receiving will not be covered.
"Rental income" insurance can help. If you own a rental property, and rent it out for $2,000 a month, you can purchase $24,000 in rental income insurance to cover a full year of lost rent, if it takes that long to repair or rebuild the home.
This is a great coverage that all landlords should have. As with all types of insurance, though, you need to be aware of the exclusions and conditions. An example of this would be:
The policy usually stipulates that the insurance will pay the "fair rental value", so if you've been charging $2,000 a month, but the going rate in your area is only $1,000 a month, you'll only receive $1,000 a month.
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.
When your rental income is too important to your financial situation to temporarily lose, rental income insurance is something you should consider very seriously. You don't get sufficient coverage from basic home insurance if you rent property out to tenants. Rebuilding or repairing a home is not something that can be done in a day. Building permits need to be obtained, you will need to find the appropriate contractors, and weather can also be a concern. Typically, repairing a home that has had major damage will take months. They can even last half a year or more. During this time, the rental money that you normally get from your tenants will not be coming in, and won't until the home is fully repaired. You'll have to find new tenants and even though the building might look perfect, the six or more months without rental income might have been devastating for you. 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?
Some home insurance policies allow you to apply a percentage of the limit on the house to cover the fair rental value. But if the whole house is destroyed, all of the coverage will likely be needed to rebuild the home. The result is that the rent you are not receiving will not be covered.
"Rental income" insurance can help. If you own a rental property, and rent it out for $2,000 a month, you can purchase $24,000 in rental income insurance to cover a full year of lost rent, if it takes that long to repair or rebuild the home.
This is a great coverage that all landlords should have. As with all types of insurance, though, you need to be aware of the exclusions and conditions. An example of this would be:
The policy usually stipulates that the insurance will pay the "fair rental value", so if you've been charging $2,000 a month, but the going rate in your area is only $1,000 a month, you'll only receive $1,000 a month.
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.
When your rental income is too important to your financial situation to temporarily lose, rental income insurance is something you should consider very seriously. You don't get sufficient coverage from basic home insurance if you rent property out to tenants. Rebuilding or repairing a home is not something that can be done in a day. Building permits need to be obtained, you will need to find the appropriate contractors, and weather can also be a concern. Typically, repairing a home that has had major damage will take months. They can even last half a year or more. During this time, the rental money that you normally get from your tenants will not be coming in, and won't until the home is fully repaired. You'll have to find new tenants and even though the building might look perfect, the six or more months without rental income might have been devastating for you. If there's a mortgage owed each month, the bank only has a certain amount of patience for late payments.
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