What homeowners need to know about insurance
If you’re looking for the best home insurance in 2016, there are plenty of national and local insurance companies that will want your business. However, it’s hard to decide which company to pick with so many choices.
Companies like Amica Mutual stand out in customer surveys, but they aren’t available everywhere. The best way to find fair rates is to get free online homeowners insurance quotes from a variety of companies. This is the easiest way to understand what rates you might face.
There’s more to take into account than just price, but it’s a good starting point. I’ve included a quote tool below so you can shop around right away. Enter your zip code in the box and click “Get Quotes” and you’ll be presented with a list of 3-5 of the best homeowners insurance companies in your area. You can research policies from each provider and determine which is the best fit for your home and your budget.
Homeowner’s Insurance Comparison
The best home insurance companies will perform exceptionally well in three critical categories:
Although Amica ranks highest in customer satisfaction by J.D. Power, companies like State Farm, Liberty Mutual, and Allstate also rank well in these areas and are worth considering.
There are many reputable national carriers offering similar types of coverage. To find the ideal option for you, the best way to start is by getting an online quote to get an idea of the average rates and companies offering insurance in your location.
What Does Home Insurance Cover?
The main reason you buy an insurance policy is for the coverage it provides. State Farm stands out for offering excellent coverage options, some of which include:
Dwelling Coverage: The part of your policy that helps pay to repair or rebuild your home if damage is the result of a covered loss. Critical home components like plumbing, electrical wiring, or your HVAC system fall into this category.
Liability Insurance: Helps protect your assets and cover costs associated with a lawsuit when you or a family member are responsible for injuring another person, or if someone is injured on your property. (For example, if your dog bites your neighbor.) It also provides coverage if you or a family member causes damage to another person’s property. $100,000 is a good benchmark for liability coverage, but this will vary depending on the size of your home and the assets you need to protect.
Other Structures: Covers the cost of repairing (or rebuilding) detached garages, sheds, and other similar structures.
Personal Property Coverage: Covers your clothing, electronics, furniture, and other personal property that is damaged or destroyed by a cause that is covered by your insurance. Most top insurance companies provide checklists, personal property calculators, or other resources to help you document your belongings. For example, Liberty Mutual provides a mobile app where you can upload pictures, receipts, and more.
Loss of use: If your home is damaged to a degree that you have to temporarily move out while it is being repaired, loss of use will help pay your housing and living expenses.
Guest Medical Coverage: Provides coverage for medical bills and related expenses when someone is injured on your property, but they do not want to sue you. $1,000 per person is a common level of coverage, though some homeowners choose to take out an extension for added protection.
Most of the top homeowners insurance carriers offer similar types of coverage. The best way to find the right homeowners insurance package is by comparing rates and coverage options through an online quote.
Factors that Influence Home Insurance
There are several factors that influence the cost of your homeowners insurance policy. You won’t be able to change or control many of these factors. However, identifying the characteristics you can modify and making the appropriate adjustments can help you keep your rates low. The most common factors that influence your homeowners insurance premium include:
Home’s age and type of construction: If your home is older, there’s a higher chance there will be problems with major components like plumbing, electrical wiring, and HVAC systems. New homes are less susceptible to these major problems.
Location: If you live in an area prone to natural disasters, with a relatively high crime rate, or located far from emergency services, expect to pay more for your policy.
Claims History: If you file several claims a year, you are more likely to pay a higher premium.
Risk Factors: If your home has a swimming pool, aggressive dog, trampoline, or other characteristic deemed risky, you’ll likely pay a higher premium.
Credit Score: Your credit score (whether good, bad, or average) has an impact on the price of your policy.
Deductible: The level of deductible you choose plays a role in the price of your coverage. If you choose a high deductible, that means you have to pay more out of pocket if an incident does occur. The trade-off is a lower premium. (As a side note, I recommend sticking with a deductible you’re comfortable with. If your home is damaged, coming up with $1,000 is probably manageable. Coming up with $2,500 or $5,000 is probably going to be more difficult for most of us. Remember, your insurance won’t kick in until the deductible is met.)
Read more: 10 reasons to take out life insurance
Coverage Amount: The amount of coverage you select will play a role in the price of your insurance.
You can’t control the location of your home, but you do have a say in whether you get a trampoline or an aggressive dog.
By choosing to minimize the risks that are in your power to control, you’re helping keep your premium low.
What Does Home Insurance Not Cover?
As much as insurance is meant to cover the things you can’t plan for, the inverse is also true: you need to plan for the things insurance doesn’t cover. Too often people file home insurance claims, only to find out too late that they’re liable for the high cost of damages themselves. Sometimes, it’s a simple matter of gaps in coverage, where someone thought they were protected but either had insufficient or incorrect coverage. Those issues can usually be addressed by either upgrading a policy (before disaster strikes) or switching providers to one with better coverage options. However, there are certain situations that aren’t likely to be covered by any insurance company, situations that can leave you on the hook for a lot of money if you aren’t prepared. Here are some of the most common:
Home insurance does not cover damage caused by weather-related flooding. Many insurance companies do offer special coverage or water damage endorsements, but they only cover accidents occurring inside the home (or on the property), such as flooding caused by burst pipes. They won’t cover water damage caused by heavy rain or overflowing rivers. If you think your home is at risk of flooding, or want the peace of mind of the added coverage, the government does offer protection through the National Flood Insurance Program.
- Earthquakes: The most common earth movement damage is that caused by earthquakes. Special endorsements can be purchased for an extra fee in all states except California, but without them, no standard policy covers earthquake damage.
- Landslides and Sinkholes: Earthquakes aren’t the only forms of earth movement to consider. Standard policies also won’t cover the damage caused by sinkholes or landslides. Like with earthquake endorsements, some companies may offer this protection, but with the exception of the state of Florida (which mandates sinkhole coverage) they aren’t legally required too.
Wind damage is unlikely to be covered under a basic home insurance policy in hurricane-prone areas, such as the Atlantic or Gulf coasts. In these areas, you will most like purchase added endorsements to your policy to cover the increased risk.
The most common simultaneous event that could be problematic for homeowners is a storm that causes both wind and flood damage. Depending on your policy and endorsements, you could be covered for one, but not the other. If an insurance adjuster attributes all of the damage to the uncovered cause, you could be liable for the cost of damages from both.
Home insurance companies assign a certain level of responsibility to the home owner for performing both routine and preventative work on a home in order to keep it properly maintained and livable. As such, there are many maintenance-related issues not covered by standard policies:
- Burst pipes: As pipes age, they can become brittle and are at a greater risk or cracking or leaking. That risk can be exacerbated by any number of factors, like frozen pipes in winter, or some unlicensed, D-I-Y plumbing. The home damage caused by a burst pipe may be covered if you have extra water damage endorsements, but the cost of the actual pipe repair isn’t.
- Sewer Backups: Blockages, torrential rainfall, and even cracks caused by tree roots, can cause a sewer line to back up and flood your home. Unfortunately, these backups fall under the same category as burst pipes. The resulting damage may be covered if you have the special endorsements, but the cost of the line replacement won’t be.
- Mold Rooms with high humidity such as basements, attics, or crawl spaces (or any room which experienced previous water damage) can be a breeding ground for mold. Mold growing on floors or walls can be a potent allergen and cause any number of respiratory problems. Because mold can easily be controlled with preventative maintenance, home insurance policies rarely cover it without additional, costly endorsements.
- Termites Termite cause billions of dollars in damage to homes every year. The wooden beams that support your home are a food source that can sustain massive colonies of the pests, all the while slowly destroying your house with you none the wiser. Home insurance companies view infestation by termites (or any animal or pest) as a sign of neglect and will not cover the cost of damage.
- Ordinance changes In some instances, new laws or government regulations could require upgrades on a home that isn’t otherwise damaged, such as updates to an aging (yet functional) natural gas pipeline. Some cities have even passed ordinances that required homes of a certain size to install fire suppression systems, at the cost of the homeowner. Some insurers offer added ordinance coverage, but a standard policy will not cover the cost of government-mandated upgrades. The same is also true if the government confiscates or condemns your home or property for any reason. Home insurance will not cover the damages.
Any damage caused by accidents at a nearby nuclear power plant are not covered by home insurance policies. However, federal law requires nuclear power companies to contribute to an insurance pool that will cover the costs of nuclear accident damage.
Acts of War
Living in the United States, being covered against acts of war probably isn’t a primary concern when purchasing home insurance. However, with the number of domestic terror attacks in the either executed or prevented over the past few years, more people are probably starting to think about it. As it stands, home insurance companies do not cover any terror attacks using nuclear, biological, chemical or radioactive weapons. They are considered acts of war, and there for uninsurable. However, those are extreme cases. Most insurance policies do cover damages cause by explosions, smoke, and fire, which are the most likely of an unlikely scenario.
Certain Dog Breeds
Many policies include coverage for the medical costs incurred in the event that a homeowner’s dog bites a guest or neighbor. However, some breeds with a reputation for being aggressive may be charged a higher premium, or not be covered at all. It’s important to always report dogs to your insurer to identity any breed-related gaps in coverage, or any extra steps needed to make sure that you are protected.
In addition to the basic coverage options listed above, the policies of each major company include other types of coverage to complement the basic options outlined above. For example, Allstate also offers optional coverage for identity theft restoration, scheduled personal property, water backup, and more.
Most home policies cover damage from wind and fire, but natural disasters like floods or earthquakes almost always have to be added on as an additional policy option. If you live in areas particularly susceptible to these threats, you should look into the catastrophic coverage options offered by the provider before making a purchase.
Important Things to Keep in Mind
Home Insurance Protects More Than Your Home
Despite what the name might imply, home insurance does much more than just cover your home. In fact, any standard policy should cover all of the following:
- Dwelling coverage: This is the “home” in home insurance. Dwelling coverage pays for the damages to your home – including electrical wiring, plumbing, and heating and air conditioning – from any covered cause. The insurance pays for the repair of those damages. But sometimes, the damages are so severe that repair is impossible and you need a total rebuild. It’s important to ensure that you have enough dwelling coverage to cover the cost of any potential rebuild.
- Other structures coverage: This coverage pays for damages to any other structure on your property, such as garages, sheds, fences, etc. The same damage
- Personal property coverage: Reimburses you for personal items in your home damaged or destroyed by any covered cause, such as furniture, clothes, sporting goods, and electronics.
- Loss of use coverage: Loss of use pays your additional housing and living expenses if covered damage forces you to move out of it while it is being repaired or rebuilt.
- Liability insurance: Liability coverage protects your personal assets and covers the cost of your defense costs if you are ever sued for injury or damages to another person or their property, regardless of if the incident occurred on your property. However, like any insurance, there are levels of coverage. Depending on your assets, you may want to add increased limits to your policy.
- Medical payments to others: This coverage is a lesser version of liability coverage for incidents. It pays for the minor medical costs of anyone injured in your home, such as cuts, burns, or simple falls.
You might be underinsured
Most people concerned about the scope of their insurance coverage try to protect themselves against all possibilities by adding extra endorsements to their existing policies. However, even someone who is completely “covered” could still be underinsured. In fact, about half of homeowners are. Most are insured for repairs, but in the event of catastrophic damage, it might be necessary to rebuild.
Rebuilds are a part of your policies dwelling coverage. However, that coverage has limits. When purchasing a home insurance policy, most people chose a coverage limit equal to the cost of their home. This is especially true because most home insurance policies are bought as a requirement for mortgage approval. Most lenders only require the minimum dwelling coverage which is the selling price of the home. Their only concern is recovering their investment in the event of a total loss.
However, there are a number of factors that could make a rebuild more expensive than the original purchase price or tax assessment of your home. For example, the cost of some necessary building materials has increased significantly in recent years. Also, depending on the causing event, specialized workers may be needed for a rebuild in order to prevent further damage to the property. And there is always the possibility that building codes may have changed since your home was built, requiring new, costly features that you didn’t have before. It is very important to make sure that you have enough dwelling coverage to cover the full cost of a rebuild.
Some valuable items need their own endorsements
Your personal property coverage reimburses you for the cost of replacing the valuable items in your home should they become lost or damaged in a covered event. However, that coverage does have a specific dollar limit. What that limit is depends on your policy, but for very valuable, high-priced items (like a very expensive engagement ring), you will need to purchase a special endorsement for their official appraised value in order to ensure that you a fully reimbursed.
Flood damage is not covered by a standard insurance policy
As previously mentioned, water damage caused by sources inside of the home, or on the property, are covered by your home insurance policy. However, weather-related flooding is not. Flood insurance must be purchased through the National Flood Insurance Program.
Home insurance covers damage; home warranties cover mechanical breakdowns
Most wouldn’t expect their home insurance policy to cover the cost of their mini-fridge if it ever stops running, but many mistakenly assume that the large, vital systems are covered, such as heating and air conditioning or water heaters. Unfortunately, that isn’t the case. Home Insurance does not cover mechanical breakdowns. Those systems fall under that umbrella of general maintenance. However, home warranty plans do cover those systems, as well as important appliances. It also covers many of those “routine maintenance” areas that home insurance doesn’t, such as electrical systems, plumbing, garage doors, and even some roof replacement.
Read more: Types of Life Insurance
Choosing the Best Homeowners Insurance Company
In order to get the most accurate estimate of what your homeowners insurance will cost, I recommend utilizing the online quote tools found on the insurer’s website or the comparison tool I included at the top.
To give you an idea of what insurance prices look like from some of the best insurance providers, I got a quote for a home in a Chicago suburb.
These are the monthly quotes I received:
State Farm: $117.75
Liberty Mutual: $129
Amica came out to be considerably cheaper than the next provider in this scenario.
Each homeowners insurance company asks for slightly different information, but as I went through each online tool I used the same profile with the following characteristics:
Location: Address located in a Chicago suburb
Home Value: $315,000
Size: 1,900 square feet
Applicant Age: 40
Home Type: 1 story
Roof Type: Asphalt shingle
Payment Terms: Monthly
The great thing about online tools is that you determine the exact type of coverage you want, select the level of your deductible, and choose the payment terms. It might take a little extra legwork, but online quote tools really do put the power in your hands to find the cheapest policy.
Many online tools, like the one provided by Liberty Mutual, enable you to modify the coverage levels you select, so you can clearly see how changing one component directly impacts the price of your policy. (For example, you could enter a low value for your deductible, see what your rates look like, then enter a high value and see how your rates changed.)
Homeowners Insurance Discounts
All of the best homeowners insurance companies offer a variety of discounts. If you fail to take advantage of these discounts, you’re just leaving money on the table. To give you one example, if you took advantage of a multi-policy discount and bundled the same State Farm home insurance policy quoted above with an auto insurance policy, your monthly rate would drop from $117.75 to $76.50. That’s almost $500 in savings per year!
When it comes to discounts, Liberty Mutual is one of the most competitive providers.
Some of their discounts include:
- Multiple-policy Discount: Available if you have an auto, life, or other type of insurance policy with the same provider.
- Protective Device Discount Available if you have a home security system, sprinkler systems, fire alarms, or other security devices in your home.
- Claim-Free Discount: Available if you haven’t filed a claim over a certain period of time.
- Exclusive Group Savings Available if you have membership or affiliation with certain businesses or organizations. Liberty Mutual’s group savings network includes more than 14,000 employers, alumni associations, and professional associations.
- Newly Purchased Home: Available if you recently purchased your home.
- New/Renovated Home Available if you recently renovated your home.
- Early Shopper Discount: Available if you request a quote before your current policy expires.
- Insured to Value Discount: Available when you insure up to 100% of the cost to replace your home.
Take advantage of Liberty Mutual’s discounts by completing an online quote on their website.
The best homeowners insurance companies offer a high number of discounts, helping you keep your premium low. If you’re unhappy with your current policy or feel like you’re paying too much, you can always get a quote with a new provider that offers discounts that better match your profile.
Selecting an insurance company that maps to your discount profile can result in major savings.
The circumstances that surround filing a home insurance claim have the potential to make the whole ordeal quite stressful. When your home has been damaged, the last thing you want to do is go to battle with an insurance company that you’ve been making payments to for the last several years.
Based on data from studies conducted by J.D. Power and Associates and ConsumerReports.org, when it comes to filing a claim there is a clear distinction between the different insurance companies. The company that excelled in both studies was Amica Mutual.
Amica achieved the highest numerical score across all categories in the J.D. Power 2014 U.S. Household Insurance and Bundling Study. These six categories measure factors like Overall Satisfaction, Price, Policy Offerings, Claims, and other characteristics fundamental to quality homeowners insurance.
Amica also ranked at the top of Consumer Reports’ homeowners insurance ratings. This study measures existing customers’ satisfaction with agent availability, the dollar estimate received when damages occur, and timely payment by the insurer.
In the event that you do need to file a claim, it’s comforting to know you can easily contact your agent, be treated fairly, and get the money you need to make repairs quickly. Ranking exceptionally well in separate studies conducted by two of the most reputable companies is a good indicator that Amica is doing something right.
(As a side note, the other insurance provider that ranked well in both studies is USAA. However, a major drawback of USAA is that membership is limited to those with military affiliation. If you, your spouse, or one of your parents have served in the military, USAA is definitely worth looking into.)
Homeowners Insurance Rates by State
As previously discussed, in order to be fully covered against disaster, you’ll need plenty of added endorsements, increased coverage limits, and (potentially) an extra flood insurance policy. All of these things could significantly increase your annual premiums above the original “sticker price.” While it may be tempting to cut corners to save some of those costs at the onset, the financial ramifications of not having adequate coverage when you need it could be severe. The trick of shopping for home insurance then becomes finding the best policy at the best price. You don’t want to overpay, but you also want to be protected, which might mean preparing to pay more than initially planned.
In order to help you plan your finances accordingly, we’ve created the following interactive map to use as a reference tool when doing your research. With it, you can view the average monthly and annual home insurance rates for each state, and also how they compare to the national average. For the most current rates in your area, check with your insurance agency locally or online.
There are any number of risk factors that can quickly raise your insurance premiums. Some of them are completely in your control, with active steps you can take to eliminate the risk and lower your costs. Others are beyond your control, such as crime and weather. However, even for those factors that aren’t preventable, there are steps you can take to either reduce your risk or minimize the eventual damage. Those simple steps could be enough to reduce your premiums.
As mentioned earlier, certain dog breeds with a reputation for being aggressive can be more expensive, or impossible, to insure. Some companies base their decisions on a dog’s history of aggression. Others will deny coverage based on breed. The simplest solution to reduce this risk is to avoid owning any dog blacklisted by your insurer. For those companies that will still insure, but at a higher rate, you may be able to reduce that premium by completing an approved training and socialization program.
Because of the drowning risks both to your family and anyone visiting your property (invited or otherwise), a pool will significantly increase your home insurance premium. Securing your pool with its own fence, installing self-locking gates, and having safety equipment readily accessible may be enough to lower your risk in the eyes of an insurance company. However, the best way to avoid the higher premiums is avoid installing a pool at all. The money saved on the insurance may even be enough for a gym or private pool membership, a place where someone else assumes all of the financial risk.
Along with pools, trampolines make up what insurance companies refer to as “attractive nuisances.” Their fun, but the risks involved make them a headache to insure. You can reduce your personal injury risk by installing a net around your trampoline, but it won’t be enough to lower your premium. The easiest way to do that is to invest in safer recreational yard equipment instead.
It may take some research to find it, but all area have a fire protection rating based on how far it is from a water source and the distance to a responding fire department. If a fire where to break out in your home, a poor fire protection rating increases the chances of total property loss, which in turn increases your insurance premiums. Fire protection systems wouldn’t be sufficient to decrease your premiums in that case, but installing a sprinkler system could. It’s a costly solution, but one that could pay off in the long run.
Even if you did your research when home shopping and chose a neighborhood with low or non-existent crime rates, you can never prevent all crime. Your home is stationary, but criminals aren’t. However, simple steps like adding an alarm system or deadbolts will not only make your home safer, it may also make it cheaper to insure.
Personal Claim Frequency
If you have a history of filing home insurance claims, you’re immediately flagged as a potential liability to your insurer. If you’ve had a lot of accidents with previous insurers chances are you’ll be filing a claim at some point with the new one. As such, you can expect a higher premium. The easiest way to reduce this risk is to be a responsible homeowner. Preventative maintenance and proper safety measures can go a long way toward minimizing your claims and your premiums.
Location Claim History
While you can control your personal claim history, there’s less you can do to control your location claim history. As seen on our interactive map, insurers charge a higher rate in states that a regularly victims of weather disasters. The same is also true of areas frequented by burglaries. While there’s nothing you can do to prevent weather and crime, you can take steps to reduce your personal claims history while living in an area with a higher one. Proper weather preparedness and home security systems could make the difference between your neighbor filing a claim and you avoiding one. It may not reduce your premiums at the onset, but over time you could establish yourself as a responsible homeowner and see your rates drop.
Just like a poor credit score results in a higher interest rate on financial loans, it can also influence your home insurance premiums. Many states let insurers use your credit score when determining a premium. That credit score is a number that reflects your bill payment history and current amount of debt. It’s a quick way for a bank to determine if you’re a good investment. The insurance industry is also a financial one. They can make the same determination. If you look like a high bill payment risk, you could see that reflected in your premiums. The easiest way to avoid that is by taking the necessary steps to raise your credit rating: pay bills on time, limit spending, and eliminate debt.
Secondary and Vacation Home Insurance
In the event that you purchase a secondary or vacation home, you’ll want to make sure that you have the same scope of insurance coverage as your primary residence. However, you may need a separate policy to do so, perhaps even with a separate provider. The policies issued by some companies don’t extend to second homes. And depending on your provider, your standard home insurance could exclude certain properties like rentals. Or, they could simply not offer the right types or amount of coverage. Once you do settle on a provider, there are things you’ll want to keep in mind:
Secondary or Vacation Homes Have Higher Premiums
All of the home insurance dos, don’ts, coverage concerns, risk factors, and advice that has been discussed thus far also apply to a secondary home, except more so. Everything used to determine the premium on your primary residence is factored into your second residence, but at a heavier weight. A secondary home is automatically viewed as a higher risk by the insurer because it’s assumed that you will physically be in the house far less than in your permanent home. First and foremost, a vacant home is a burglary target. But beyond that, an uninhabited home is less likely to benefit from those preventative measures that reduce your overall risk.
For example, in the event of a sudden storm, there’s no one there to board windows at a moment’s notice. If a fire were to break out, there might not be anyone around to call the fire department in enough time to prevent a total loss. And even if a secondary home isn’t a rental property, they tend to be used more often as a guest or vacation homes for family and friends. This increases your personal liabilities in the event that a guest is injured, or if they cause any damages during their stay.
Because of all these added risks, some insurers charge a flat percentage to the top of the premium for a secondary home. For example, if a company charges a 20% surcharge, that means a $1,000 annual premium for a primary residence would cost $1,200 for a vacation home. Other companies have different tiered charges based on the circumstance, such as whether or not the home is routinely cared for by a maintenance company in your absence. In those cases, the less physical presence there is in the home, the higher the surcharge. The can range anywhere from 10 to 30 percent.
Because of the varied costs, it’s wise to research your current provider’s surcharges before purchasing a secondary residence.
Ways to Lower Your Vacation Home Premium
You can still take the same steps to reduce your overall risk, and therefore your premiums, in your vacation home that you would with your primary residence. You can still plan on that extra surcharge tacked onto the lower rate regardless, but there are things you can do to offset some of it.
Bundle Your Policies
The most effective way to lower your vacation home premium is by bundling your policies. As mentioned, it’s unlikely that a standard home insurance policy will cover a second residence. You will need a separate policy, possibly issued by a different provider. It’s important to shop around for the best policy for the second home, but if it’s possible to purchase both from the same company, you could see some deep discounts. You may be able to save anywhere from 5 to 10 percent overall.
Install Alarm and Fire Systems
Because the insurers main concern with a secondary home is vacancy, your next option for lowering premiums is to install monitored security and fire alarm systems. Unfortunately, the decrease in premiums for those preventative measures might not outweigh the cost of implementing them because of that added surcharge. It’s unlikely that the annual savings for installing a central security system will be equal to the annual cost of 24/7 security monitoring. Likewise, something as complex as a fire suppression system is very expensive, and not likely to show an immediate cost benefit.
The real value in taking those costly preventative measures is how it could influence your claim history. If the systems prevent the damage in the first place, not only will you be saving yourself the headache of trying to recovering your costs, you will be saving yourself from having to file a claim at all. Again, the less claims you have in your history, the lower your premiums will be over time.
Vacation Home Rental Insurance
There is a difference between renting out your second home as a full-time rental property and renting it occasionally to family and friends. If you sporadically rent out your home, you most likely don’t need to inform your insurance provider. However, if you rent your property for more than a few weeks a year, or have full-time tenants, it does need to be reported. Having tenants presents a new set of liabilities for both you and the insurance provider, so you want to make sure that you’re completely covered. If your second home is serving as a rental without the insurance company’s knowledge, you could see your claim denied if you ever have to file.
If you do add rental coverage, you can expect an additional surcharge added onto your premium. For a one-time, short-term rental, you may be able to add a simple endorsement to your existing homeowner’s policy which will cover you only for that rental period. On the other hand, if you plan to regularly rent out your second home, you may need separate business coverage or a landlord policy.
If you are renting full-time, and have decided on a landlord policy, it would also be wise to inquire about adding fair rental income protection. If a covered disaster were to leave your rental property uninhabitable, this coverage could help reimburse you for the lost revenue.
Don’t Own a Home?
Homeowners insurance obviously won’t be of much interest to you if you don’t own a home. If you’re currently renting or making the move soon, you won’t want to miss my next article that discusses the best renters insurance companies and shows you why one is better than the rest.