What is the best route to take?

[caremimu]

What is the name of your state (only U.S. law)? Ohio

When I got married, I kept the home I lived in. My husband and I purchased another home in the city where he lived, and we have lived there ever since. My original home is covered by homeowners insurance and is listed as a second home due to the fact that the only time we actually stay in it is when we travel home to visit during the summer(s) and during the holidays.

With the economy being what it is, my husband is insisting that I either sell it--which I cannot afford to do because I would probably not even get enough to pay off the loan in this economy--or I rent it out in an effort to try and absorb some of the cost of keeping it.

My questions are these. First, can anyone tell me what the difference actually is between Landlord insurance and actual homeowner's insurance? And secondly, if I decide to empty it of my personal possessions and ultimately rent it out--would it be more cost efficient to keep my homeowner's insurance on the home and just reduce the coverage to only the structure, or would it be more cost efficient to cancel the homeowner's insurance all together and get Landlord's insurance and require any potential renters to provide their own renter's insurance? I don't know if I'm actually even "required" to do one or the other if I decide to rent it out, or if the issue is a personal choice one--so if anyone knows the answer to that question, as well as the others, please feel free to chime in. I don't actually want to call my insurance company until I've decided for sure what avenue I want to take because the house (and the insurance company) is located in a very small town where everyone knows everyone else's business while it's happening. Whenever I've called asking ANYTHING, I swear it's like the Spanish inquisition!

Thank you for your input . . . I really appreciate it.

[ecmst12]

If you are going to rent the house out, you will HAVE to get landlord insurance. You can ask your insurance agent about what the differences in coverage and cost would be. You should also make sure that your tenants carry renters insurance. You will ALSO need to either hire a professional property manager to manage the rental, or get down to the library and start researching your state's landlord tenant laws to learn what your rights and obligations would be if you decide to rent the place out.

Don't forget that you'll also need to declare any rental income on your taxes.

[moburkes]

You're an adult. You're not required to answer those questions. In any case, you'll need to be upfront with the insurance company if you want a claim to be paid.

[caremimu]

So can someone please explain the actual difference between landlord insurance and homeowner's insurance? My neighbor thought that the only difference was that nothing of content is covered with landlord insurance, whereas with homeowner's insurance, there are provisions for that. If that is correct, then it would behoove me to get the landlord insurance if I decide to rent it out because I will obviously not be wanting to pay to insure someone else's contents (that would be what THEIR renter's insurance would be for). I did however check with the county auditor's office regarding rental property obligations for the area, and I was told that there weren't any with regard to my actual preference for insurance on the property. That is why I was trying to find out the difference between the two and get some input as to the pros and cons of each before I actually made my decision.

Thanks to anyone who offers input.

[moburkes]

A home policy assumes that the owner is in the house, taking care of maintenance issues, is cognizant of potential liability issues, is keeping the home in good repair. It assumes that the homeowner will notice a leak within hours and start to fix the problem or will notice that the tree limbs are leaning on the roof and will work to get them cut away. It includes coverage for all perils except those which are specifically excluded.

A landlord policy assumes that tenants, in general, don't maintain the property to the same standards as the owner, and that a property may be vacant for a few weeks between tenants, and that a rental property is likely to have more claims between tenants, and that when the rental is vacant for those few weeks between tenants, it is more likely to be vandalized, which is why vandalism is not covered, except by endorsement.

A landlord policy, for less coverage, since personal property coverage is limited, and with less perils covered, is generally more expensive. Landlord policies are not required to include liability or medical payments coverage either. A home policy covers loss of use and a LL policy covers loss of rents.

Many, many, many differences.

[ecmst12]

Simply put, one covers you to be a private homeowner using the house for yourself and your guests, the other covers you to be a business owner. You have different liabilities and responsibilities as a landlord then as a homeowner. And if you have the wrong kind of coverage, if you become a landlord without informing your insurance company and obtaining the appropriate coverage, the net effect is likely that they will find you materially misrepresented yourself as a private homeowner and deny coverage entirely. No one wants that.