As homeowners contend with a chilly housing market, many are turning to others to pay their mortgages for them – by renting out their properties. Through first quarter 2009, Allstate saw approximately a 25.3 percent increase in the number of Virginia homeowners switching to landlord policies over prior year.
Evidence of the still struggling housing market is visible in the most recent data from the National Association of Realtors that shows existing-home sales were down 3.6 percent in June 2009 compared to the previous year.
For those who are now considering renting out their houses while holding out for the market to shift, there are a few things they should be aware of before becoming landlords.
“New landlords may not really realize the risks they are taking on when deciding to rent,” says Dave Prendergast, field vice president for Allstate, Capital Region. “When you become a landlord, you have to not only protect the property, you also have to protect yourself against anything that could happen in or around it, including, let’s say, a visitor who trips on a cracked sidewalk.”
Some Virginia homeowners may turn to renting because it can allow them to hold onto the property as an investment, while obtaining the necessary funds from a renter to cover the mortgage payments and other costs, such as utility bills. However, not everything is smooth sailing for first-time landlords. Taking on the extra responsibility of an additional property can also mean taking on extra liability.
For those who are new to the title of landlord, a Landlord’s Package Policy covers:
– Building: Helps protects against a covered loss to the building caused by many events, including fire, lightning, wind and hail, vehicle damage, and collapse of building from weight of ice, snow or sleet.
– Personal property: Typically provides coverage for the landlord’s personal property on the location or used to service the building.
– Liability: Helps protects the landlord from claims that arise due to injury or property damage occurring on the site. This feature also provides the landlord with coverage for legal defense.
– Medical Protection: Typically covers medical expenses of visitors who are injured on the property, due to conditions that are the responsibility of the landlord.
_ Fair Rental Income: Typically provides compensation for lost rental income resulting from a covered loss.
Additional coverage options may be available for:
– Satellite dishes
– Burglary
– Meeting building code requirements
– Fire department charges
– Loss assessments
– Vandalism
Landlords who already have another insurance policy from the same company on their primary residence or automobile may be eligible for discounts to help manage the cost of insurance.
“With consumers having to watch their budgets, a lawsuit or loss of rental income could be devastating, “said Prendergast. “When a homeowner takes on the responsibility of becoming a landlord, chances of a loss situation grow, so it is important for customers to choose the insurance coverage that is right for them to get peace of mind.”
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