I wrote about vacant-home insurance recently, in a "Home Economics" piece for the Business section. Basically, it's the type of insurance you need - with different and typically more expensive coverage - if your home will be empty longer than the period allowed under standard homeowners' policies.
These days, many houses stand unoccupied for long stretches as they await buyers. But let's not forget that some sellers are renting their properties while waiting for the market to improve.
That, as you might expect, also requires something more than the standard homeowners' policy, says Loretta Worters, of the Insurance Information Institute in New York.
A landlord insurance policy covers:
The house. Much like a homeowners' policy, it usually provides coverage against fire, lightning, falling objects, smoke, explosion, wind and hail, and water damage, among other hazards.
Other structures on the property, including garages and sheds. This coverage is often limited to 10 percent of the overall coverage on the house. For example, for a home with a $200,000 policy limit, no more than $20,000 would be paid to a policyholder to cover losses incurred to structures on the property but apart from the house.
Property contents. While landlord insurance policies do not insure a tenant's belongings, they typically cover any of the landlord's personal property that might be used by a tenant, such as tools, landscaping equipment, appliances, and furniture - either stored on site or provided by landlords for use by their tenants. The best way to be sure of having enough coverage is to take an accurate inventory of the contents on the premises.
Lost rental income. With this coverage, a landlord is reimbursed for such income lost (typically up to 12 months) because of building damage.
Legal fees and liability protection. Most landlord insurance policies cover legal fees should a tenant file a lawsuit. This type of policy would also pay out in the event of a judgment against a landlord, protecting his or her personal belongings and assets if the tenant prevails in court. The policy may also cover medical payments in the event that a tenant is injured.
Landlord policies generally cost about 25 percent more than standard homeowners' policies, Worters said, while the cost of vacant-home coverage can be 50 percent and more than what you'd pay if the house were occupied.
Many factors determine the price of a landlord policy, including square footage of the house and additional structures; area building costs; a house's features and the materials used to build it; the local crime rate; likelihood of damage from natural disasters; proximity to a fire hydrant and station; and the condition of a home's plumbing, heating, and electrical systems.
Worters said landlords should require tenants to show proof of renters' insurance for personal property, family liability, guest medical, and additional living expenses. That not only protects the landlord, but prevents tenants from trying to sue if there is a fire or other disaster.
If a home is being rented, the landlord needs to notify an agent or insurance company representative. Be aware that many insurers do not provide coverage for vehicles left at a landlord's home that are accessible to tenants.
Consider purchasing a personal umbrella policy, Worters said, which provides liability protection beyond the limits of homeowners, auto, and watercraft personal-insurance policies.
With an umbrella policy, depending on the insurance company, the policyholder can add $1 million to $5 million in liability protection - protection designed to kick in when the underlying liability on other current policies has been exhausted.