With a new year upon us, it is a good time to look at your insurance documents and make sure all of your files are organized for the upcoming year.
It is not uncommon for a family or an individual to make a move from one house to another, and not consider the best adjustments that must be made for property insurance.
If you have decided to rent out the home that was once your residence, you will need to make sure the insurance is updated accordingly. When you make a property your home, you will commonly be insured with an HO-3 or an HO-6 policy. When you decide to rent out the home and not live there, the carriers will tell you that homeowners (HO) policy is not the appropriate insurance. You will likely be steered towards a DP-1 or DP-3 policy. These dwelling policies do not require the commitment of the named insured residing at the property but have different indemnity as compared to a homeowners’ policy. You want to be informed and make sure you understand what comes along with the change. Also, ask about additional insurance protections that may just cost relatively small increase in premium.
Possible inquires to be made to your agent in writing with confirmation of receipt:
- Do I have the right kind of policy?
If you decide to rent out a house that was once your home, update your insurance and make sure you email your desires for proper coverage to the agent so there is no confusion. You must tell the agent if the property is being rented and you are no longer residing at the property.
- Am I covered for the bad stuff?
If you are renting out the property, you will want to have coverage for not only the potential damages that could happen if there was a claim, but also consider the insurance you will need if someone get hurt at your property.
- This place is a disaster!
Do you have coverage for damage caused by the tenants? Ask for details in writing.
- Who has to sleep there and how often?
For occupancy, what terms are required.
- For Sale by Owner
Ask your agent about whether the policy covers this property if you are moved out and want not to rent it or sell it
- What if a Hurricane really strikes?
Ask your agent about the proper coverage for loss of rents.
- Does the policy cover any water damage at all?
A recent policy I reviewed in Florida, covered VOLCANIC ERUPTION but not water damage, theft or vandalism which are the much more likely damages. Another policy or another company could offer much better indemnity. You don’t know what you don’t have until you study the documents. In Florida, the checklist of coverages form conveniently fails to list “Water” as a summary item.
- Does this policy coverage any probable property damage at all?
Dwelling policies often list named perils- know which perils are included.
- So what if there is a lot of wind?
Does the policy cover for Hurricanes? If so, check and understand the deductible.
Does this policy contemplate appraisal? Is there an appraisal clause?
- Who fixes this place?
Look to see if the insurance company will try to require you to use their repair “person” to fix the damage. Commonly called the managed repair or right to repair language. People’s Trust and Florida Peninsula are attempting this language and sending out repair persons heavily criticized for their scopes and sometimes lack of licensure.
- Can I get a discount?
Look to see if the policy is giving you credit for the wind mitigation efforts and make sure they are properly applied. Bill pay in full for one year may also be less expensive than paying 4 or 6 payments.
Talking to an agent about homeownership changes is not enough, use written correspondence and make sure your questions are answered in writing so there is no disagreement or confusion later. Moving is one of the most stressful life events, don’t forget to be diligent and properly handle your property insurance business when making a change of address.