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Good Asks for Goodlad: Types of Renters Policies

Hey, my name is Butch Swank from Goodlad & Swank Insurance. Today, we’re going to talk about rental property insurance. In our world, it’s called a dwelling policy. So there’s a clear delineation between a homeowners policy, someone that lives there actively, someone who has a vested interest, versus a tenant that’s in your property that is paying you rent.

So there are diminished coverages, a lot of diminished coverages for this type of property, the rental property or the dwelling policy. As a consequence of that, you also are paying less because you have less coverages.

You’re typically going to have reduced water coverage. The main components of like the roof, the house burns down, or a hurricane comes…a lot of the coverages are going to be precisely the same as a homeowner’s policy. But the rental policy, because they understand that you’re essentially trying to make money on this transaction, or at the very least, have tenants offset as much of the mortgage payment as possible, the policies are less expensive. So you can actually try to make some money. But again, as a consequence of that, you will enjoy less coverage.

And there’s typically two different types. There’s a DP3, which is a broader policy, and then a DP1, which is very, very stripped down. Some of them have zero water coverage so if there’s a leak, it’s not covered. So talk to your agent and figure out the math – what you want to have income per month, what does this monthly policy cost you, and what kind of coverages are you comfortable with.

Depending on who you are, you’ve got different needs. We’ve got a lot of clients, some clients that have 60 – we’ve got one who is just over 100 – properties that they insure. And then we’ve got a fair number of people who just bought a house and they lived in it for a long time, they built another house, and they just rented that one out.

So we would want to actually spend a little bit of time with you to figure out “What are you trying to accomplish here?” and trying to get as much coverage as possible. Is this is your nephew living there, or do you have 50 houses and this is part of your business and you need to really look at numbers precisely? So let’s have a discussion.

Hopefully, I’ve answered some questions, just generalized questions. If you want to discuss something more specific, please call our office. Our phone number is 239-674-7630 or, if you prefer, you can visit our website. Thank you very much. 

Goodlad & Swank