First and foremost, we need to say that our agency does not recommend renting back your newly purchased home to the sellers as it can open yourself up to unnecessary headaches. However, if the situation is unavoidable following the list below should help protect you in the event of a claim.
Require that the tenant purchase a renter’s policy
- The policy should have at least $500,000 in liability coverage
- It should also have an endorsement for water/sewer backup coverage
- You should be listed as an additional interest; this endorsement will notify you if the policy is cancelled.
- Send a copy of their policy to your insurance agent for your file. In the event of damage caused by the tenant it will make it easier to file a claim on that policy.
Have your insurance agent run you quotes for a Dwelling Fire policy AND a Homeowner’s policy
- Be upfront with your agent regarding the occupancy of the property and it’s expected timeline.
- To be properly covered you will need a Dwelling Fire policy while the home is tenant occupied. If you have a homeowner’s policy in place during this time the insurance company may deny claims as the home is not owner occupied.
- Inform your insurance agent of when you will move into the home in a timely manner. This way your agent can move the coverage to the proper policy and avoid insurance gaps.