Do you have a rental suite that you are renting? Or maybe you rent out a portion of the home you live in? 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. 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.
Having rental income insurance would make this process more manageable and less painful financially. 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.
Every landlord would be wise to get this type of protection. Of course, you need to go through the policy so that you understand any conditions and exclusions. An example of this would be:
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. So if it takes 6 months to rebuild, and another 3 months to find qualified tenants, you won't be paid for the full 9 months, even if you had enough coverage, but only for the 6 months it took to rebuild.
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. Keep in mind that it will take a while for the repairs to be made. You need time to find contractors and to obtain building permits and you also depend on weather. Typically, repairing a home that has had major damage will take months. It could even be 6 months until it's completed. Rents that you regularly receive from your tenants will not be paid during this time, while repairs are being completed. After all of the time required to complete the repairs, you will have to go through the process of getting new tenants, and all that time without rental income will likely have hurt you a lot financially. If you have to pay mortgage, the bank is not interested in the fact that you have lost your income.
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. 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.
Having rental income insurance would make this process more manageable and less painful financially. 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.
Every landlord would be wise to get this type of protection. Of course, you need to go through the policy so that you understand any conditions and exclusions. An example of this would be:
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. So if it takes 6 months to rebuild, and another 3 months to find qualified tenants, you won't be paid for the full 9 months, even if you had enough coverage, but only for the 6 months it took to rebuild.
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. Keep in mind that it will take a while for the repairs to be made. You need time to find contractors and to obtain building permits and you also depend on weather. Typically, repairing a home that has had major damage will take months. It could even be 6 months until it's completed. Rents that you regularly receive from your tenants will not be paid during this time, while repairs are being completed. After all of the time required to complete the repairs, you will have to go through the process of getting new tenants, and all that time without rental income will likely have hurt you a lot financially. If you have to pay mortgage, the bank is not interested in the fact that you have lost your income.
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