The U.S. rental housing market has never been larger. A 2016 report from Trulia shows that the number of renters is only increasing.
The shift is being driven not just by those opting to rent over buying a house, but also by an expanded supply, as companies like Airbnb make it easier for almost anyone who owns a home or apartment to rent all or part of it out to others.
The common risks associated with letting others rent a space you own are of course well-known, from theft, fires and floods to the possibility a tenant or visitor may be injured on the property.
Here, however, are three threats that may not yet be on your radar as a landlord, but arguably should be. Should any of these arise, and should your landlord insurance coverage fail to protect against it, you might find yourself paying out of pocket to cover major losses.
These apply whether you’re renting out your home traditionally, or through a service like Airbnb.
Invasion of Privacy
Landlords increasingly utilize security cameras both in and around rental properties to provide insight into damage, crime and more. At the same time, there’s growing sensitivity from citizens about how this technology may compromise privacy. As a result of indoor cameras, you may be subject to invasion-of-privacy claims. To protect yourself against such claims, be proactive by including a written statement in your leases about the presence of cameras in the home, or by either turning them off or removing them from the property prior to renters moving in.
Mother Nature can be unforgiving, including in her effect on landlords and their properties and income. Major natural disasters may leave you with a costly repair bill, which should be reimbursed by a good landlord insurance policy, at least in part.
As for rental income lost to weather, this is where business interruption insurance comes into play.This type of coverage should be a priority for you, especially if you’re heavily reliant on rental income to make ends meet.
That said, keep in mind a few caveats about this type of insurance. First, in some cases a local government may have to determine that your home is unlivable or needs to be torn down following a major storm in order to have your coverage kick in. That’s currently the situation for many landlords in Texas, for example, after last year’s devastating hurricanes.
Also, note that simply being unable to rent your property due to a lack of demand probably does not itself constitute a business interruption that’s reimbursable by insurance. Particularly if you’re using a rental property through a company like Airbnb, you may face long periods of vacancy, and it’s a common problem for those renting beach homes, of course.
Unexpected Damaged Property
While you may have some of the big items covered for loss and damage, you should sweat the small stuff. If you’re renting out a fully-furnished home, consider how each and every item could be in danger of damage or loss. As too many Airbnb hosts have discovered the hard way, you never know when your guests may choose to misuse your property, say by turning it into an out-of-control party spot. Or when the otherwise-friendly family decides to bring their not-housebroken dog along with them. Unexpected damage to items you weren’t considering can occur, and if you’re hosting short-term rentals, they likely will occur at some point. It’s also entirely possible a renter leaves something unsavory behind, such as bed bugs.
Chances are you’ll need to investigate additional coverage for unusual and unexpected items, like carpets, toasters, ceiling fans, and maybe even bedding. At the very least, be sure to have a detailed home inventory on hand to reduce the likelihood of delays should damage occur and you need to file a claim.
Despite all this, don’t let the lesser-known risks scare you away from becoming landlord.
In most key markets there’s still a higher demand for rental properties than there is a supply. If you dostep into the rental market as a landlord, though, keep a firm eye to both the common and uncommon risks of opening your home up to strangers.
Maxime Rieman is Product Manager at ValuePenguin. Educating and assisting shoppers about financial products has been Rieman's focus, which led her to joining ValuePenguin, a consumer research and advice company based in New York. Previously, she was product marketing director at CoverWallet and launched the personal insurance team at NerdWallet.
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