Lots of people choose to rent out their houses, condos, or apartments on a short- or long-term basis. Even when the best tenants are present and the property is in the ideal location, having the right insurance is important. It’s impossible to know when a freak storm will hit and damage a home, a burglar will get inside, or someone will slip and fall inside the property leading to the need for medical care.
In many cases, typical homeowners insurance is not going to cover any damages that occur while the property is rented out, leaving the property owner to deal with the costs. However, specialized insurance policies exist that can give landlords better peace of mind. There are many forms of specialized real estate-owned insurance in Colorado so choosing one can be challenging without having all the facts.
Options for Short-Term Rentals
Some individuals choose to rent out their home for a short period. This might be a couple of weekends or a few months. For investment property owners who do this type of renting, there are two options to consider when it comes to insurance.
- Homeowners Insurance Rider – A variety of insurance companies will allow a homeowner to have a short-term tenant and even cover them if the insurance company is alerted to the fact in advance. However, in other cases, a rider will need to be added to the homeowner’s insurance policy. The rider will endorse having tenants for a short period and allow the landlord to continue receiving coverage during that time.
- Business Insurance Policy – Landlord protection insurance in Colorado may be an option for those who want to rent out their main home for short periods but plan to do so regularly. Homeowners insurance policies don’t cover any business activities that take place in a home so that cannot be counted on. To get the right level of coverage, a business policy will be needed to protect the property.
Insurance Opportunities for Long-Term Rentals
Those who have tenants in their Denver property as a long-term situation can choose to get tenant occupied insurance. Essentially, this insurance covers a building that tenants occupy but the owner does not live in. This type of insurance is available whether someone rents out a four-story building to multiple people, a single-family home, an apartment, or even a condo.
With landlord protection insurance in Denver, the policies cover a variety of different situations. One part of the policy will be related to covering physical damage to the home itself caused by snow, fire, ice, lightning, hail, wind, or other covered circumstances. Another part is liability coverage, which assists if someone is injured on the property, leaving the landlord responsible for medical expenses or legal fees. Some policies also offer coverage for loss of rental income. This applies if the property is being rebuilt or repaired after a covered loss, making it impossible to bring in tenants. Below is a bit more information about each of these coverage types.
- Property Damage – This landlord protection insurance in Colorado applies when the property is damaged from a natural disaster, an earthquake, fire, or other situations out of the control of the landlord. In some cases, it may also cover irresponsible tenants and vandalism. These policies are available as actual cash value or replacement cost and the choice of which to go with is personal.
- Rental Income Loss – If a situation occurs at a landlord’s property that makes it completely uninhabitable (such as a fire, a flood, a sinkhole, or even severe mold), rental income loss insurance is what protects the property owner. The insurance offers a temporary reimbursement of rental money to cover the amount that would otherwise be brought in by occupying tenants.
- Liability Protection – This form of coverage comes into play if legal or medical costs are required because a tenant or guest suffers an injury that is considered to be the landlord’s fault. This is often in cases of property maintenance problems, such as architectural collapse, icy walkways, or out of control beehives.
In addition to the typical forms of coverage with tenant occupied insurance in Denver, most insurance providers also have add-ons that will cover other situations. For instance, a landlord might choose to purchase a rider that covers the contents of the property. This would help with replacing and repairing appliances, furniture, fixtures, and other items that are owned by the property owner but used by the tenants. It does not cover belongings that the tenants own. Instead, a tenant would purchase their own renters’ insurance to make sure those things are covered.
Selecting the Right Company for Real Estate Owned Insurance in Colorado
Property owners and landlords should be aware that all insurance policies are distinct and different. The amount of coverage, the number of exclusions, and the riders available will vary by insurance provider and even the location of the rental property. That means the worst thing someone can do is to choose an insurance provider at random and sign up with them.
When choosing landlord protection insurance in Denver, there will be several levels of coverage that people can choose from. Some will be happy with a basic policy that has traditional coverage for acts of nature. Others may wish to choose a more extensive policy that protects and pays back in a variety of other situations. It’s a matter of need and choice.
Anyone who rents out their property, on a short- or long-term basis, needs to have some form of insurance in case of accidents and emergencies. It ensures the property is protected and that the landlord isn’t paying a ton of money out-of-pocket. While there are limited options for short-term rentals when the owner still occupies the home, the same isn’t true for long-term rentals where the landlord lives elsewhere. Take time to research the options and choose the right provider to meet every need.