Protecting your stuff is why you purchase insurance. The section I coverage of a rental property insurance policy tells you what will be covered and how.
Rental Property Insurance Coverage – Section I Coverage
Section I - The part of insurance you care about
Every insurance policy has sections. On a rental property insurance policy the there are two sections. Inventively, they are called Section I and Section II. This article breaks down Section I only. Under each section, there are a handful of coverage parts. Insurance doesn’t have to be complicated. So, let’s see if we can break these down into understandable pieces.
Section I – Protects your stuff, you know the stuff you care about. There are typically 4 parts or coverage items provided by section I.
Coverage A – Dwelling – This will be the rental property itself; the main house. PLUS, it will include anything that is attached to the house. So, things like attached porches, decks, car ports, and patios are part of the dwelling. However, if it’s only connected by a wire or a fence, there is no coverage.
Coverage B – Other Structures – This includes any buildings or structures that are not connected to the house. Including, but not limited to things like: detached garages, storage buildings, fences, pools, gazebos, walkways, and driveways.
Coverage C – Personal Property or Contents – This is tricky, because most rental properties don’t come furnished. Also, contents or personal property of tenants are NOT covered. So, for typical investors, this is going to include things such as refrigerators, stoves, washers, dryers and other appliances, but check your policy some of these things may be covered as a part of the house.
Coverage D – Loss of Use – If a rental property suffers a covered loss, and becomes uninhabitable, the insurer will pay the “fair rental value” for the rents that are lost. Meaning that if there is a fire, and your renters move out while things are being fixed, you can still be reimbursed for the rent that you would have otherwise received.
That’s it. Four coverage parts in Section I. Pretty simple. So, you have the house, any other structures, the stuff inside, and the rent you receive. Not complicated at all.