I just spoke with a friend in Nevada. A couple years ago, he bought a new house and rented his old one to some tenants. The tenants wrecked the place, and it was also vandalized externally.
And it was serious damage. In total, the cost was going to run nearly $20,000 to correct the problems.
“No problem,” he thought. “I’ll call my insurance company to file a claim.”
This is when he learned a hard lesson: Owner-Occupant insurance and rental dwelling insurance are not the same thing. In fact, when the insurance company learned he’d turned his property into a rental, they not only refused his claim, but they cancelled his policy.
The problem is that this wasn’t “merely” a $20,000 mistake. He’d planned to use that money to fix the property up in order sell it, because he’s facing some financial pressure. Now, he’s unable to fix the property and probably won’t be able to sell it… and will soon face foreclosure.
Think of that: The wrong insurance policy leads to FORECLOSURE. It’s a harsh, but true, reality.
So if you’re a landlord, be sure to consult with your insurance agent to make sure you have the right coverage. It just might save you a foreclosure in the future.
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