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I want to rent my home. What insurance issues are there to consider?

Rental property owners have unique insurance needs. A standard homeowner’s policy is not appopriate for rental property because (1) you do not need to insure the contents of the house unless you provide furnished accomodations, (2) you need to be more concerned about liability issues, and (3) you need to protect yourself against the loss of rental income.

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Property Taxes

Property taxes are not standard across the board and, as an investor planning to make money from rent, you want to be aware of how much you will be losing to taxes. High property taxes are not always a bad thing, especially if the neighborhood is an excellent place for long-term tenants. But the two do not necessarily go hand-in-hand. The town’s assessment office will have all the tax information on file, or you can talk to homeowners within the community.


Your tenants may have or plan to have children, so they will need a place near a decent school. When you have found a good property near a school, check the quality of the school as this can affect the value of your investment. If the school has a poor reputation, prices will reflect your property’s value poorly. Although you are most concerned about the monthly cash flow, the overall value of your rental property comes into play when you eventually sell it and retire someday.


No one wants to live next door to a hot spot for criminal activity. Go to the police or the public library for accurate crime statistics for various neighborhoods. Items to look for are vandalism rates, serious crimes, petty crimes, and recent activity (growth or reduction). You may also want to ask about the frequency of police presence in your neighborhood.


Locations with growing employment opportunities tend to attract more people–meaning more tenants. To find our how a particular area rates, go directly to the U.S. Bureau of Labor Statistics or to your local library. If you hear of an announcement for a new major company moving to the area, you can rest assured that workers will flock to the area. However, you may also want to be aware that this will cause house prices to react, either positively or negatively, depending on the corporation moving in.


Check the potential neighborhood for current or projected parks, malls, gyms, movie theaters, public transport hubs, a other perks that might attract renters. Many areas have loads or promotional literature that will give you an idea of where the best blend of public amenities and private porperty can be found. The internet is a great source for this as well.


Rents will be the bread and butter for your rental property, so you need to know what the average rent in the area is. If charging the average will not cover your mortgage payment, taxes, and other expenses, keep looking. Be sure to thoroughly research the projected areas enough to gauge where they are headed in the next few years. If you can afford the area now but major improvements are in store that would increase property taxes, then what could be affordable now may lead to bancruptcy later.

Getting Information

Talk to renters as well as homeowners in the neighborhood. Renters in will be far more honest about the negative aspects of the area because they have no investment in it. If you are set on a particular neighborhood, try to visit it at different times on different days of the weeks to see your future neighbors in action.