What covers our needs without going overboard?
October 22, 2012 8:56 AM   Subscribe

We own a house. Two of the floors are rented out. What is the best home insurance for us? General home insurance questions to follow.

I've done some searching, but it seems like advice is conflicted. We would like basic coverage for the house but also to protect the areas that are rented out (as in, a tenant leaves the oven on by mistake and the house burns down).

Additionally, we are considering knocking a bit off of rent for one of our tenants in exchange for light super duties (letting in contractors, shoveling snow, dealing with utilities, etc). What happens if he slips on the ice while shoveling? Is something like that covered in the policy?

Homeowners and landlords, what have you found that works for you? What specific add-ons are worth it and what are not? Is there a good, comprehensive, independent guide to how much home insurance you should buy? It seems like right now we are almost TOO covered - but I don't know for sure.

Any specific details to Pittsburgh, PA are also welcome (policy info, great agents, etc). Thanks!
posted by amicamentis to Home & Garden (6 answers total) 1 user marked this as a favorite
So what's going on here is that you need to talk to an agent. This is not a policy you'll either want to skimp on or be able to procure for yourself online. A licensed Pennsylvania insurance agent--preferably an independent broker rather than a captive agent--will be able to discuss your insurance needs with you and place your policy with the insurance carrier that offers the best premium for your particular needs.

Part of the problem that makes this more complicated than normal is that traditional homeowners' policies don't really deal with renters very well, particularly if you've essentially subdivided your home into several units. But I believe there are personal/commercial hybrid policies that should be just the thing you're looking for.

At this point, I think your best bet is probably getting in touch with someone at the local chapter of the Pennsylvania Residential Owners' Association, the trade group which organizes and lobbies for landlords in Pennsylvania. If you aren't already in contact with them, you really should be anyway, this issue aside. But you'll likely be able to get a decent recommendation about a local agent that handles other local landlords' business and go from there.

TL;DR: You're asking questions that only a licensed insurance agent will be able to answer, but your intuition that you need more than a standard homeowners' policy is correct.
posted by valkyryn at 9:18 AM on October 22, 2012 [4 favorites]

Have you thought about putting the home in an LLC or Land Trust? Operate the home like a small business. Have a separate checking account and everything. That creates asset protection - then someone would sue the business (the house), and not you personally.

If you do that, then the business should have property insurance and liability insurance. And you as a tenant renting in that house should have renters insurance.

IMO this set up gives you the greatest protection from loss.

And, an insurance agent will not be able to help you in deciding asset protection plans, like forming a land trust or not. An insurance agent will provide the best insurance for whatever legal set-up you bring them. I would give some thought to finding the best legal set up before going to an insurance agent.
posted by Flood at 10:14 AM on October 22, 2012

valkyryn is right, you need to speak to a professional about this. A lawyer, an accountant and then an insurance broker.

You don't want to get creamed on taxes, and PA is loaded with them. Also, you want to mind your p's and q's with regards to the landlord/tenant relationship.
posted by Ruthless Bunny at 10:28 AM on October 22, 2012

I came back to this question to basically say what Ruthless Bunny just said - you need professional help.

You need a lawyer first, then an insurance agent. I know that is probably spending money that you didn't intend to spend - but trust me, in real estate, it is worth while to do it right from the start.
posted by Flood at 11:55 AM on October 22, 2012

Have you thought about putting the home in an LLC or Land Trust? ... That creates asset protection - then someone would sue the business (the house), and not you personally.

It is unlikely that an LLC would protect you against personal injury claims, particularly if you are living in and personally managing the property. This is a very common misunderstanding about LLCs that could cost you dearly. Instead, you need personal liability insurance. See an insurance agent.
posted by JackFlash at 12:46 PM on October 22, 2012

I have Landlord's Rental Dwelling Insurance through MetLife, which can give you an idea of the sort of policy you might look for. Personal injury is definitely above and beyond what this policy covers, however.
posted by thomas j wise at 2:41 PM on October 22, 2012

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