In the last week, I have had a few different conversations about who is responsible for what damages, when a claim occurs, in a rental property. If you own the investment property, you, most likely, have a landlord insurance policy. This policy should cover the structure for damage due to a fire, a pipe breaking and will offer loss of rent coverage in the event of a covered claim. Your tenant should have a renters policy to protect their personal belongings and liability in the event of a covered claim. They too have loss of use coverage that will help them afford to stay in a hotel in the event they could not stay in their home, due to a fire or water damage.
As the landlord, you may feel bad for your tenants if you have a slab leak in the property you are renting to them. Unfortunately, there is no coverage to pay your tenants directly for the loss of use to their home.
The proper way to handle it, if the home is uninhabitable, is for the renter to file a claim on their renters insurance, in order for them to stay somewhere else, while the home is being repaired. Most often, tenants do not want to file a claim, but this is the right way to handle it. Their policy will cover them and the landlord's policy will cover the structure and their interest.
We know this is a tough situation to be in and if you have any questions, we are happy to help you understand your options and provide some advice.
