Home Insurance in 19149>Question Details

Yvette Johns…, Home Owner in Philadelphia, PA

Is a landlord's policy more expensive than a homeowner's policy?

Asked by Yvette Johnson, Philadelphia, PA Fri Aug 26, 2011

I'm trying to sell my house, but am considering renting it out instead. I was told that I would need to change my homeowner's policy to a landlord's policy.

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7
Yvette,

thank you for posing this question, because I have not been asked this before. I would have guessed exactly what Alexander pointed out. However it is interesting to see that in other states it differs.

SOMETHING TO NOT MISS! If you do in fact decide to rent out the home YOU MUST notify your mortgage holder that it is now an investment property. This could change the terms of your loan and your interest rate. But if you do not notify them and there is a problem, it could be bad news!

Also, you should always speak with your tax accountant about the implications on taking on an investment property. Depending on if this would be a gain or a loss yearly etc. The tax implications as well as a change in your mortgage terms could change your mind about renting, or strengthen the idea.

Cover all your bases to make sure you are making the best financially sound decision for you.

The other thing that most home owners do not consider when they are thinking about renting a once principal residense: You never know who you r renter is going to turn out to be. You could get a great tenant that takes impecable care of your home, or you could have someone that doesn't pay their utilities and turns into a squater. Ask yourself if you are in a finacial position to cover the costs of repairs if the worst happens.
0 votes Thank Flag Link Fri Aug 26, 2011
I want to apologize to the insurance professionals in PA for not stipulating that my experience is my geographic area. I was speaking from personal experience. In Tennessee, where I own 18 rental homes, all of my landlord policies are nominal compared to full blown home owner's.

Again, my apologies.
0 votes Thank Flag Link Fri Aug 26, 2011
If you really want to know call the expert a PA Insurance agent that knows the business. Not one person so far sells Insurance for a living or is License in the state to do so!
Philip J. Cunningham Sr
VIP Realty Corp 215-725-5700 X49
Web Reference: http://www.greatpare.com
0 votes Thank Flag Link Fri Aug 26, 2011
IT's interesting that the members of the community from other states say the opposite of what is generally true in PA. Insurance Rate in PA are some of the highest in the country. Each State has different coverage’s, laws and of course it matters who the carrier is

Let's see the answers nad the experiences of the PA agents.......

Alexander Shulzhenko
Realty Mark Cityscape
0 votes Thank Flag Link Fri Aug 26, 2011
Hello Yvette, You name is familiar to me, have we met?
What a Perfect Question. Just yesterday I was quoted a Landlord's policy almost double to what i pay now as a Home owner. Here are the reasons why ( i am sure i am missing one or two reasons).
Reason 1) The insurance company knows that the renter will not take as good care of the property then if you lived there as an owner thus you are more likely to file a claim. 2) The landlord's policy has a Rental Loss protection that (if the property is damaged ) prevents you from renting it thus losing money....claim filed.
In General Landlord's policy is more risky for the insurer.

Alexander Shulzhenko
Realty Mark Cityscape
http://www.eRealtyFind.com
0 votes Thank Flag Link Fri Aug 26, 2011
Typically they are cheaper because they don't cover any contents.

Make sure your tenants are advised to get renter's insurance and make sure you have them initial that the smoke detector is in working condition on move-in. State in the lease that you do not supply a fire extinguisher but one is highly recommended.
0 votes Thank Flag Link Fri Aug 26, 2011
Check with your insurance company.

However, my experience has been that a landlord's policy is less expensive than a homeowner's policy. For instance, in a landlord's policy, you're not insuring the contents. That's the responsibility of the renter.

On the other hand, I'd also suggest you look into an umbrella liability policy. It'll cover your rental property as well as other things you insure (primary residence, car, etc.) The cost probably will be $300 or so for maybe $2 million worth of coverage. It's well worth the protection. Again, check with your insurance company or agent.

Hope that helps.
0 votes Thank Flag Link Fri Aug 26, 2011
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
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