Do I need to change my homeowners insurance if I rent out my house?

Do I need to change my homeowners insurance if I rent out my house?

There once was a time when flipping a house was no big deal. You simply bought the second property, took a few months to redo the cosmetic damage and create the home of someone's dreams, put it on the market for way more than you paid for it and more than you paid to fix it up, and then it sold. No muss, no fuss and, for some property flippers, no need for homeowners insurance. But times have changed and real estate in the U.S. is not selling as it once did. While the home buying credits were in full force in early 2019, the real estate market picked up a bit, but now we are back to our normal lows. Not only that, but property values have fallen as well so you can no longer sell properties for as much money as you once could.

That means that many flippers have turned into the owners of multiple homes that they are forced to turn into rental properties so that they have some income to cover carrying costs. But now that they will own the secondary properties they purchased for years and years, they definitely need to consider some insurance. It is not up to these new landlords to invest in home insurance that covers contents of the property. That would be the responsibility of their renters. So when you get a home insurance quote, there is no need to concern yourself with contents-but dwelling and other structures are definitely coverages you should consider. But because of the liabilities involved in renting a home out to other individuals, you need to be clear when you get your home insurance quote that the coverage is for a rental property and not for a primary residence. That way your insurance company can ensure that you get all the coverage you need for accidents, damages and insurable incidents that could be caused by your renters. So you think: Do I need to change my homeowners insurance if I rent out my house?

Do You Have Enough Homeowner's Insurance Coverage?

In today's world, it's more apparent than ever why we need to make sure we have coverage, and have enough of it. It seems every other day we are hearing of another natural disaster, be it a hurricane, a flood, or earthquake.

Marshall & Swift says: "59% of U.S. homeowners don't have the insurance to replace their home or the valuables inside after a fire, hurricane, earthquake or other disaster." They added that most homes are undervalued for insurance purposes by an average of 22%.

It's time to check your homeowner's policy. Even better, bring in your policy to a trusted agent to go over it with you. While most policy's coverage are determined by square foot, that is usually not going to be an accurate determination for your needs. You've got to consider the cost of the items inside your house that would need replacing, too. Any new purchase of significant value should trigger a call to your agent.

Make sure you are clear that your pool or detached mother-in-law apartment doesn't require a separate policy. Consider extra protection for natural disasters like fires, lightening, hurricanes, and other winter-related damage. For flood damage you usually need federal insurance, which your agent can provide you with.

In California, and especially in the San Ramon, Pleasanton, Dublin, Tri-Valley area, you may want to consider earthquake insurance through private insurance companies or through the California Earthquake Authority.

Every year you should take inventory of your policy and take into consideration what valuables you've bought since you got your policy. Don't wait until something happens, call your agent and hope it's covered. Be proactive and put things in place so that when something does happen, you can have peace of mind. Something else to consider is that an older home is going to cost more to rebuild than a newer home, because more repairs are involved. We have had many clients come to us in the East Bay area with current policies that are no longer working for them with the current economy or the life changes people are experiencing.

As people do a search for "Insurance San Ramon", they find us, Fowlerinsure, in the heart of the Tri-Valley, as we take all the time our clients want to not just shove insurance at them, but to evaluate what their life experiences are and future expectations, so they can properly plan their proper insurance needs.