Most anyone who owns a rental house (and there are a lot of people out there who do – more than you would probably think), knows that obtaining insurance coverage at a reasonable price can be challenging. If you are new to the landlord business, thinking about buying a rent house or thinking about switching insurance carriers, this article may be worth your time to read.
The first challenge is finding an insurance agent who will write the insurance policy at a competitive rate. Some insurance companies refuse to even write insurance on rental properties, while others will for a premium, and the remaining ones will write it at a reasonably good rate if the home measures up to their standards. Shopping around for a good insurance carrier is the easy part of the coverage process since there are a lot of insurance agencies in the marketplace to choose from.
The next step is where things can get tricky. In order for most carriers to write it, they will typically require an insurance inspector to make an on-site inspection of the property. If you don’t know what the important things they are looking for, be prepared to be blindsided. Planning and preparation ahead of the on-site inspection are all-important, to ensure that you are not surprised and that everything goes well. If the home is relatively newer in age, there is less to be concerned about than if you own a home that is older in age. Having said this, this article is written in mind for those looking to rent and insure an older home.
Some of the most important things the insurance inspector is looking for and will be taking pictures of to include in their report are; condition of the roof and whether the gutters are clogged or not, and if the gutter downspouts appear to be properly draining rainwater away from the home’s foundation; whether or not there are any big trees overhanging, or located near the home; whether the electrical panel has fuses and are in need of being upgraded to breakers; the condition of the power line connected to the house and whether or not it is in need of upgrading; the age and condition of the HVAC and water heater, and if they appear in need of repair or near the end of their life expectancy; if there are any grills located directly underneath the house soffit vents; and whether or not there is any firewood or wood debris stacked up against the home’s foundation. Of course, there are other things the insurance inspector will make note of in their report, but the aforementioned head to the top of the list.
So in a nutshell, what does all this mean to the person who is looking to obtain rental house insurance at the best rate possible? If you know what the insurance inspector is looking for, then you can plan ahead and address any issues with your home before the inspector comes out. If you fail to prepare in advance, you could run the risk of the insurance carrier refusing to insure your investment property based on the findings of the insurance inspector’s report. If you currently own a rental property that is being insured, but at a rate higher than you feel it should be, you may want to think twice about moving it to another carrier who may be offering a lower rate. Knowing what an insurance inspector looks for is especially important if you are not in a position to make any needed improvements to the home you may be currently renting, thinking about renting, or considering buying to rent.