Real estate has long been a popular investment due to its stable growth, and many people are tempted to buy a new home to rent out or convert their existing home into a rental property rather than selling it. In addition to increasing in value over time, this activity can generate attractive rental income. However, as you can imagine, the insurance policy will be different from a standard home insurance policy. As we regularly receive calls from people in this situation, Assurances Multi-Risques would like to offer you some useful advice to save you a lot of headaches.
What to expect from your insurer?
The first and most important thing to do when you decide to rent out your home is, of course, to notify your home insurer, as the policy will need to be amended. This is because a rental property insurance policy differs from a standard home insurance policy, which assumes that you live in the insured property. First, you should know that your standard home insurance policy includes an exclusion for professional activities. And for an insurer, renting a building is considered a professional activity because it generates income. In their eyes, your file becomes more risky since you do not live in the property. It is therefore clear that your home insurance premium will increase and some of your insurance coverage may be reduced. In order to reduce the risk you represent, insurers will then require you to insure your main risk, in other words, they will also want to insure the place where you live. Keep in mind that you must avoid making a false statement to your home insurer at all costs, since in the event of a claim, they will systematically refuse to compensate you. You will therefore have to pay for the repairs yourself, and your insurance premiums will have been paid for nothing.
Here are a few quick tips if you decide to rent out your home:
- Contact an independent insurance broker specializing in rental properties.
- Always ask your tenants for references;
- Don’t forget to run a credit check on your new tenants.
- Check whether they have a criminal record and the status of that record. For example, if your tenant has a criminal record for growing cannabis, it is better to find another tenant.
- Ensure that the latter is covered by tenant insurance;
- Make spontaneous visits to ensure that the premises are in good condition.
- Have your lease reviewed by a legal advisor.
Renting out your home should normally be a positive experience and generate additional income in the short or long term. But it can also become a nightmare if you don’t know the ins and outs. In addition to saving you a lot of time, an insurance broker will find the best insurer specializing in rental housing for your needs, helping you increase your chances of success and make your decision a smart and timely one.
Now that you’ve been well advised, how will you enjoy your free time?