What are My Insurance Options as a Landlord?

Posted in Home Insurance

Have you recently become a landlord? Maybe you planned it that way—or maybe you purchased a new home, couldn’t sell your old one, and now you’re renting it out. Either way, when it comes to homeowner’s insurance, landlords have rights too. Here’s what you need to know to ensure you and your tenants support a positive, mutually beneficial relationship.

First things First – Revisit Your Colorado Homeowner’s Insurance Policy 

If this is your first experience as a landlord in Colorado, it’s a good idea to look over your existing homeowner’s insurance policy before you do anything else. In many cases, standard insurance policies only cover owner-occupied homes. That means, unless you live in the same dwelling you rent (if you’re renting a room for instance) your existing policy isn’t going to be sufficient.

However, read through the policy. Often, if you’re only renting short-term (in season for example) or you live in the same home as your tenant, you can usually supplement your current policy with additional coverage.

Determine If You Need Colorado Landlord’s Insurance 

Chances are, if you rent more than one room or throughout the year, you will need a separate Colorado insurance policy. Landlord policies are categorized into three types:

  1. Landlord Policy 1 – Simple coverage. Includes the basics, like fire and vandalism.
  2. Landlord Policy 2 – Broad coverage. Protection against named perils (hail, wind, vandalism, etc.).
  3. Landlord Policy 3 – Comprehensive coverage. Usually covers all perils, unless specifically excluded. 

It’s recommended that landlords opt for DP-3 coverage whenever possible. Why? It has to do with replacement cost versus actual cash value. In other words, if something were to happen to your home, a DP-3 policy would provide money to repair what needs fixing, while a DP-1 may only give you partial funds based on wear and tear and actual value.

Landlord Protective Policies in Colorado

Equipment coverage. Many insurance policies in Colorado offer protection for landlords in the event of major equipment failure, as in a hot water furnace or boiler.

Loss of rental income. In addition to equipment coverage, landlords can secure protection against loss of rental income if the dwelling remains empty while repairs are made. Note: you can only collect loss of rental income if your home is unoccupied due to a covered loss, as in the roof needs to be repaired. You cannot collect simply because the dwelling isn’t rented.

Liability protection. Liability coverage offers protection in the event you are sued for damages related to your home. For example, if a tenant slips and falls on a sidewalk in front of your home, you have protection. In most cases, it is recommended that landlords buy $1 million in liability protection.

Being a landlord in Colorado can be an eventful experience, but it doesn’t need to be costly. The right insurance policy, whether it’s an add on to an existing policy, or a separate policy all together will save you time, money and unwanted hassles. We at ToInsure.Me will sit down with you and discuss all your options as a landlord, give us a call today.

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