Balfour Insurance Agency

Rental Property Insurance is for NON-owner occupied properties. They are essentially designed to cover your building and property inside, but not any of the tenants property.  There are several types of Rental Property policies offered by a wide variety of insurance companies and not all coverages are the same or are available in all states.  Rental Property Policies do not provide coverage for your Tenant. As a Landlord you should insist that tenants purchase Renters Insurance, not just for the property portion but also for the liability. In many state the landlord has been held liable for the actions of the Tenant.  These policies are know as Dwelling Property Policies and denoted "DP", Sometimes the are called Dwelling Fire policies.

Dwelling (referred to as Coverage A on most policies)

This is the empty building. This part is referred to as Coverage A: (rooms, fireplaces, tile floors, carpeting, etc. ) and the structures attached to it, such as an attached garage. The amount of coverage assigned to your dwelling should reflect the amount it would cost to completely repair or rebuild  should it suffer a covered loss. Replacement cost should be determined by using  construction estimating software. Most Insurance Agents and Companies can provide an estimate after asking you detailed questions about your Structure.  Never use your the purchase price! Why, sales price has no relation to the actual cost to rebuild. The Sticks and Bricks of the home, in addition land dose not burn. However, if it's been a while since you last updated your policy coverage or if you are not sure that your dwelling is adequately covered, you can check with your agent. Please remember the owner is ultimately responsible for the Coverage amounts on the Dwelling or Structure. Rental Property policies Do Not cover property on a Replacement Cost basis, they cover on an Actual Cash Value basis, under the DP-1 Basic form, but under the replacement cost for the DP2 & 3.

Other Structures (Coverage B)

Not all structures that exist on your property are actually attached to your Building. Therefore, Coverage B offers insurance protection for the other structures such as a detached garage, gazebo, or storage shed.  Not an automatic coverage.

Personal Property (Coverage C)

This is for the Landlord's personal possessions, things such as furniture and appliances are covered.  Claims are paid on a Actual Cash Value basis.

Rental Income (Coverage D)

This covers the loss of income for your Rental Property should you suffer a covered loss.

Additional living Expense (Coverage E)

This optional coverage pays for your increase living expenses  if you suffer a covered loss under coverage "A", which makes your house uninhabitable.  Usually you  have to move out temporarily while it's being repaired. Not an automatic coverage.

There are 3 types of Dwelling Property Policies typically sold: The Basic Form (DP-1), The Broad Form (DP-2), and the Special Form (DP-3) but are not inclusive of all the perils and exclusions

DP-1 Basic Form Covered perils: 

A basic form Fire insurance policy provides protection from the following perils:

• fire
• lightning
• internal Explosion
• removal

Optional Perils For an additional Premium

1. Extended Coverages: (EC)

• windstorm
• hail
• aircraft
• riot or civil commotion
• vehicles
• explosion
• smoke

       2.  Vandalism & Malicious Mischief (V&MM)



DP-2 Broad  Form Covered perils:

A broad form Dwelling Property insurance policy provides all of the basic form perils including both EC and V&MM plus the following perils:

• damage by burglars  (NO THEFT COVERAGE)
• falling objects
• weight of ice, snow or sleet
• freezing of plumbing, heating, air conditioning system
• accidental plumbing discharge or overflow of water or steam
• rupture of steam or hot water heating system, air conditioning systems, or water heaters
• damage from artificially generated electricity
• volcanic eruption

DP-3 Special Form Covered perils:

This is the inverse of the Basic and Broad forms, Special Form cover's anything that happens as long as it is not excluded.  Please note under the DP-3 the Dwelling  (Coverage A) & Other Structures (Coverage B) are covered  under the Special Form Perils,  but the Personal Property (Coverage C) is covered by the Broad Form Perils.  You can pay extra and purchase the Special Perils coverage for Personal Property (Coverage C).

Common Exclusions:

These are some of the most common exclusions for a dwelling property policy, but not all.  Dwelling Property insurance does not provide coverage for the following perils:

• loss due to flood
• water that backs up through the sewers
• loss to building by earthquake, aftershocks and mud slides
• loss by enforcement law or ordinance regulating construction, repair or demolition, or zoning
• loss due to power interruption when the interruption takes place off the residence property
• loss due to neglect of the insured to save and preserve property following a loss
• war and nuclear perils
• intentional loss

Deductibles

With a Dwelling Property policy, the deductible applies to the property portion of the policy Coverages . A deductible is the amount you would have to pay out of your own pocket before the insurance coverage kicks in.  Typical deductibles are $500, $1,000 or higher and some policies have several deductibles. The higher the deductible you select, the lower your premium payment is.

Premises Liability  (Coverage F )

Liability coverage is important protection in the event that you are sued by other people for what happens on your rental property. Premises liability helps to cover the associated legal costs and related damages. Most policies provide $100,000 (minimum) of financial protection against liability claims and lawsuits brought by others for accidental bodily injury or damage to their property:

• while at your rental property

Medical Payments to Others: (Coverage G )

Most policies will pay up to $1,000 per person in medical bills--regardless of your legal responsibility--when an accident involves bodily injury to others. Higher coverage amounts are available.