The first thing to do is to call your insurance agent, because you likely don’t have enough insurance on the building itself or on yourself as the owner / manager.   Remember, I said that you have to treat this seriously as a business, and I am willing to bet that you don’t have enough personal liability insurance.  

Tell your insurance agent that you are going to be renting the property to others, and that you want “fire and extended coverage” on the house with the “maximum available liability coverage.”  

In addition, if you own the property in an entity such as a corporation or a trust, be sure to add that entity as an “additional insured” on the policy. Make sure your insurance company knows that the property is owned by the entity if that is the case.  You can document this by sending an email to your agent explaining the entity arrangement.

Some insurance companies really don’t want rental houses in their portfolio.  Some are particularly interested in serving the rental property community.  My advice is to shop around until you find an agent who wants your rental property business, then give that agent all your business.  

For years, I wasted time and energy begging my agent of 20 years to not drop my coverage, but eventually they simply got out of the non-owner-occupied property insurance business.  By being summarily dropped, I was forced to get out of my rut and find a rental-friendly agent. I did, and you can as well.

In addition, you should get an “umbrella liability policy” in the amount at least of $1 million.  These usually aren’t expensive and the premium will probably cost you less than $300 or so annually.  You have no business renting houses without that liability policy in place.

In recent years, insurance companies have become more and more picky about who they will cover under umbrella policies, and they usually do not like landlords.  You may have to shop and compare among a variety of insurance companies, but don’t give up.  And don’t forget to talk with INDEPENDENT AGENCIES who can shop a lot of companies for you.

If you can’t find an insurance company who wants your business, attend a local REAL ESTATE INVESTORS CLUB in your area, and ask others who they use. There will almost always be SPONSORS for the meeting who sell insurance.  SHOP & COMPARE.

We’ll talk more about renters insurance later in the book, but YES, you need to REQUIRE your tenants to purchase renters insurance prior to occupancy