Insurance... Home Owner vs. Rental House?

[Steppenwolfe]

I have always been told that you can only get homeowners insurance on a home you live in. Other homes/cabins/etc....that you do not reside in, is harder to insure, if at all....

Have a cabin and a home... Amica covers both equally as residences.

 

[kthompson]

I am a licensed agent but not selling property insurance now. I would have told you when this was no longer your residence you could not keep homeowners on it. Recently talking with my ex partner this came up and he said you know that was what I had always thought but we have a company who will allow the owner to keep HO on the old house as long as they had property in it. What I am saying is what has been said here already it will vary from company and depending somewhat on the exact situation of the house occupation.

To the person who had two houses covered with Allstate with HO and they did not pay, depending on how long that has been contract your state department of insurance. If they were both with same agent then there is no way they were not aware you had the situation. I would invest in attorney depending on what the department of insurance tells you. No cost with the Department of Ins. or should not be.

 

[PILOON]

Had a rental and declared it as such.
Even had 'lost revenu' rider.
Well a pipe burst while tenant was away and did serious damage since water flowed for probably most of a week.
They paid everything including the lost rental income.
Since I was in the renovation trade they paid me to effect the repairs and frankly I came out well ahead and even managed to seriously renovate the premises.
I was fair to them as I did not attempt wild claims so they were more than fair to me.
In fact I calculated that I actually showed a small profit all while making much needed updates like windows insulation and even moving some walls.
Rather than repairing plaster walls I installed knotty pine 1/2 walls. Even was able to upgrade damaged furniture with new.
Course it helped that I was in the business so to speak and had a friend that sold furniture.
At the time the claim came to about $30,000 and that was their estimate.
Once work completed I took a mere 5 emailed pictures to get a refund which actually arrived within 7 days

 

[ultrarunner]

I'm looking forward to my appointment for Insurance review with the new agent.

It could very well be since I have personal property there all is well.

My concern is liability exposure as people are litigious and a slip and fall can become a big deal.

 

[plowhog]

I still have my shop with tools and at least one car there... but the house is rented. Never met my current agent ...

It changed from a home to an investment property, and the risk profile changed. So I believe you need a different policy. If this is true, I would ask that they remove the new agent from your account and substitute one who knows what they are doing. My rentals all have landlord policies, not homeowner, but I use a different carrier.

Would a garden variety homeowner policy cover these risks:
Tenant decides to use YOUR tools and accidentally cuts their arm off-- now a claim for lifetime lost wages.
Tenant's bootleg meth lab blows up and burns down half the neighborhood.
After months of not paying rent and even more sob stories why, your eviction is greeted with a counter-suit claiming discrimination. Tenant is represented by a highly experienced local attorney who advertises their success at large settlements extracted from greedy property owners.
Your car mysteriously is the source of an unexplained fire and burns up all the tenants highly valuable possessions including a huge amount of cash.
Tenant's unruly guests fire their guns through a window and the bullet strikes a neighbor in their home watching TV.
Tenant opens the door and their pit bull charges out and attacks a small child on the sidewalk.

So, of course, I hope these never happen. But I would not want to be sitting on the wrong policy if they did!! Good luck with getting to the bottom of which policy is best. If the tenant is already there-- I'd move at lightening speed.

 

[ultrarunner]

Over the years I have had tenant kitchen fires... 2 in 35 years of managing property... it ended badly because the tenants had let their Renter Policy lapse and the my insurance went after the tenants... while they were still my tenants in one case.

Tools and Car and my Furniture are in detached shop... I have only key but not being there... it wouldn't be hard to get in.

I am concerned as you mentioned if someone is bit by dog, trip and fall, slips on the steps... etc.

My car has it's own policy... tools and furniture not... but I would be surprised if it added up to 5k value in what I have there.

This is a real rental with a local property management company... so no way to say someone is house sitting or a distant relative.

I had one claim when the county was declared a disaster area after it looked like a war zone with toppled trees everywhere... power was out for more than a week... those huge firs fall a long way!!!

 

[PILOON]

Also don't be under insured as they then will declare U co-insured.
ex: house today is worth 400K but when you built 200 was OK.
If you suffer a total loss they could invoke co insurance and cut you a check for a mere 100K.
I have seen this happed on 2 occasions.

Another caution is distance from a hydrant of fire station.
Some agents will neglect that little detail so their quoted premium will be lower than the competition and only when or if you suffer a loss will you find out.

Another caution is on seasonal rentals, many policies stipulate that only a minimal absence is permitted. Some are as short as 3 days.
Actually the absence clause in some cases applies even to your primary city dwelling.
My take is that it is mainly all about water damage.
What I do as extra precaution is shut off my water at the entrance as well as the hot water heater if away for any extended time.

 

[plowhog]

I am concerned as you mentioned if someone is bit by dog, trip and fall, slips on the steps... etc.

There are so many layers to this. Insurance is only one of them. If you are a high net worth individual, or live in California, or the property is in California, or all, the risks are real and they are everywhere. You cannot eliminate those risks. But the best attorney I have ever used always talked about making the hill as steep as possible for a claimant or litigant to have to go up.

Suppose your unattended car in the garage gets stolen for a bank robbery. Shots are fired and people die. You will be sued, no question. I believe your vehicle coverage is for motor vehicle type operations so it won't provide coverage nor cover costs for defense. Big risk. Your rental or landlord policy probably won't cover this as it was your personal vehicle.

Suppose stairs collapse and someone is paralyzed. Or an old ungrounded electrical plug shocks someone. (You did disclose that and have your tenant acknowledge it in writing-- I hope?) You "should have known" to fix such-and-such and you must have "failed" to properly inspect the property prior to tenant move-in. If you have the deep pockets, it's always your fault.

If the rented real property is in your personal name, then the many other assets, properties, bank accounts, etc. in your personal name are opened up to a claimant or litigant. A successful claim could wipe out all the personal assets. Those claims could be from a dog bite, lead paint, or a meteor that falls out of the sky and hits your tenant. The basic rule is that if anything bad happens, you are the wealthy greedy property owner that has more than your fair share, and you will get sued. Sorry for such dark commentary but I believe it is legitimate opinion.

I can tell you how I have dealt with this:
1. Put legal ownership of rental properties in a LLC or corporate entity, not held personally. This builds something of a wall around your personal assets. It is easy to move the properties in/out of LLC vs personal ownership if that is something you occasionally need to do. The one time I have done this the title company took care of it for free.
2. Purchase landlord insurance for the properties in the name of the LLC. Require tenants to maintain renter's insurance.
3. Keep good separation between the LLC and your personal bank accounts and assets (no commingling.) Ideally, don't manage the rentals yourself to minimize claims of discrimination, or claims that arise from the many things you might *fail* to do. (I do manage my rentals myself, however.)
4. Don't commingle personal property (left at the rental site) with your rental. Any personal property left at the real property being rented could be a tripwire to lawsuit/exposure. In my opinion it is a big gaping potential liability.
5. Purchase personal insurance for personal assets.
6. Purchase umbrella coverage that sits atop all your assets (personal, vehicles, LLC.)

I realize you are probably storing personal items because it is very convenient and seemingly cost-free to do so. That could get negated quickly with a claim. Another possible source of a claim is inadequate supervision of your tenant. My leases allow me to inspect the property every time the clocks change for cleanliness, safety hazards, etc.

The more you can make the hill steeper, and the more you can reduce the potential size of the economic bonanza if a claimant is successful, the more likely you are to never be sued, and never use the insurance you purchase. Sorry to digress but there are so many tangents to this insurance issue ....

 

[Tractor Seabee]

Plowhog, excellent advice. One caveat, a LLC or S Corporation does not 100% protect your personal asessets. They are still tied to the signature officer(s) personally and P & L is added to their personal 1040. They do provide a measure of protection better than sole owner or partenership however. Only a C corporation can do that completly. Multiple owners of LLCs and S Corps just increase more personal assets into to pool. As you say, make the hill as steep as possible.

I know several slum (low income renter) landlords and they have all been sued and in some cases lost. They quit that business when litigation popularity increased due to diminishing returns. My SIL tried to insure a rental duplex and was denied due to too many safety hazards. They did a very comprenhensive inspection before issuing the denial. he could not make the repairs pencil so he found an insurance company that did not inspect. He sold it before he had a problem (luck). He sold because of not finding responsible renters.

Corporate apartment owners all have extensive 30-40 page contract that cover everything from soup to nuts, definately not renter friendly due to WA being a Renter Friendly Law stste. One I lived in wating on a new house after a sale was really onerous. They held 3 inspections a year. However they were always full and prices were steep (kept out the riff-raff).

Ron