When you own New Hampshire rental property, your income depends on keeping the space rented. This is difficult to do if you have fire, storm or other damage, forcing your tenants to move out and leaving you with no rental income as well as expensive repairs.
Landlord insurance can help cover the costs of repairs while also protecting your income. Here are 5 important questions answered regarding Rental Property Insurance:
1. What kinds of coverages are typically included in NH rental property insurance?
New Hampshire landlord insurance (also known as a dwelling fire policy) typically includes coverage for the dwelling, liability and loss of income. You can also add optional coverage to cover any personal property you may have in the rental like a refrigerator, stove, or washer and drier.
Dwelling coverage insures the building itself and should be determined by the cost to rebuild the structure (it does not include the value of the land). If there are any detached buildings on the property (like a detached garage, barn, or shed) you should discuss with your insurance professional to ensure these structures are covered by the policy.
Liability is a critical coverage in a dwelling fire policy as you are not 100% in control of the property and accidents do happen. For instance:
- Your tenant is responsible for salting down on the driveway, but fails to do so after a snow storm. A UPS driver then slips in the driveway hurting his back while delivering a package. Who pays for the damages from the injury?
- Your tenant has a daughter who received a trampoline for her 8th birthday. Unbeknownst to you, it went up in the backyard for her birthday party, on which one girl broke her leg. Who is going to be sued for this injury?
These are just a couple of examples that we at HPM Insurance have experienced with our own clients but there are thousands of scenarios. Obviously having adequate liability limits is critical.
Loss of income/rent is an important coverage to protect your investment. It is typically included in a dwelling fire policy, but is written at a percentage of the dwelling amount. Be sure to speak with your insurance professional to ensure that this amount of coverage would be adequate to cover your actual loss of income should there be a loss over an extended period of time.
2. Will NH Homeowners Insurance Cover Me as a Landlord?
Like most things in insurance - maybe.
If you have a multi-family home and you live in one of the units, then you may qualify for a Home Insurance Policy. You will still want to disclose to the insurance company that you do have tenants to ensure your policy includes loss of rent and proper liability limits.
If you do not live in the rental, then you most likely will not qualify for Homeowners Insurance. A home policy is designed and priced for an owner-occupied dwelling. If you rent out your home, then you do need to get the policy re-written to cover the exposures of a landlord. If you do not, then you will most likely run into a coverage issue, should a claim occur, which could be financially catastrophic.
3. What if a tenant causes damage themselves?
Damage done to the property by a tenant may not be covered. Consult with HPM or your New Hampshire agent, but many landlords find it beneficial to require a security deposit to help cover the cost of any damage.
4. What if someone gets injured on my property?
If a person is injured on your rental property because of negligence on your part – such as not clearing an icy path – you can be held liable for medical expenses, legal fees, and more. You may also be held liable for property damage incurred due to negligence or lack of upkeep. Landlord liability may coverage helps cover these costs.
5. How much does it cost? Can I save any money?
The cost of landlord insurance varies, and depends on the location, replacement cost of the building, number of rental units, age of the building, and other factors. Since rental property income counts as business income, the cost of insurance may be tax-deductible as a business expense. Speak with your accountant for more information.
Make a Smart Investment
Owning rental property can be a wise business choice. However, when severe weather, fire, or other damage occurs, you can be on the line for expensive repairs while your income has slowed or halted. Landlord insurance can help protect you by providing important financial protections so that you can make the necessary repairs and get your tenants back in their home again as soon as possible.