- There’s no need to insure the contents of the home (unless it’s furnished)
- A rental property owner needs to be more concerned about liability issues
- A rental property owner needs to protect themselves against loss of rental income
Any prepared property owner knows that there may come a time when their property will be vacant due to hazards. During that time, repairs and maintenance occur, the property owner has to find new, good quality tenants and then get his/her property rented out again. During that time, a property owner may lose a lot of money, especially if that’s their main source of income. Property owners may not be able to make enough money at this time and therefore not be able to pay their lender (if one exists.) Rent Loss Insurance can help guard property owners from losing money while in this process of fixing the property.
Most mortgage companies require a property owner to purchase this additional policy when they buy their investment property, in case you don’t have it here’s what the premium would cover: The insurance premium gives coverage for damages to the property along with if you lose rent on account of the damage. The policy usually covers a minimum of 6 months of gross rental income when your rental unit is unsuitable for living in.
The amount of rent loss insurance depends on the gross monthly rental income after subtracting the following items: Mortgage payments, Taxes, Insurance Premiums, Expenses on utilities, Maintenance costs and the Vacancy factor for rental units in your area. You can see why having Rent Loss Insurance is valuable to have. It’s like flood insurance: You hope to never have to use it, but if you had to, you’d be glad you had it.