The Importance of Homeowners Insurance and Dwelling Insurance

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The Importance of Homeowners Insurance and Dwelling Insurance

dwelling insurance explained

Coverage You May Need for a Rental Property

When you are going to be utilizing your home as a rental property, you’ll most likely need to update your homeowner’s insurance to dwelling property insurance (also called a DP3 policy). This policy can cover some unique risks that your typical homeowner’s insurance policy might not cover.

Your insurance coverage needs to reflect that because you’re not personally occupying the property. Specifically, you do not want to pay to insure all your tenant’s belongings but instead, need to make sure your home and future rental income are protected in the event of a loss. Regarding insurance, the “risk” is different if you’re not personally living in your home year-round.

Dwelling Property Insurance can be easily added and tailored to fit your needs as an investor. For example, a dwelling policy can come into play if you rent a property with permanent fixtures, appliances, or other valuables. More importantly – if a covered claim keeps you from renting out the property (flood, fire, etc.), a dwelling property policy can include fair rental value coverage to protect your lost income.

home dwelling insurance explained

Does Homeowners Insurance Cover Your Rental Property?

In many instances, a typical homeowners insurance policy will not cover rentals. Essentially, your property becomes a business asset when you rent it out, which results in more insurance risk because tenants will not always care for a rented home the way you would – no matter how thorough our screening process! Consequently, your policy may not cover your losses if you need to file a claim.

When Do You Need Dwelling Property Insurance?

You may need a dwelling property policy when:

  • You don’t reside at the property.
  • You rent the property out.
  • You use the property for short-term rentals like Airbnb, Vrbo, etc.
  • Your home has unique insurance needs (e.g., an older roof).

charlotte rental properties near me

If you are concerned about your existing coverage, we strongly recommend reaching out to your current provider and reviewing your policy. Be prepared to let your provider know how long you rent out the home, how much you rent it for, and how the property is used when it’s not being rented. For example, is it vacant, used as a vacation home, or will you live there? The more details you can provide, the better equipped your policy will be.

We are partnered with some leading local insurance agents who can review your existing policy and determine if adjustments need to be made.

For more information, contact us at 704-535-1122 or email Brandon.Davis@HendersonProperties.com.