We’ve all seen the movies, TV shows and commercials of people accidentally back their vehicle through the living room, garage or swimming pool of their home. Even though these moments are funny, the big question is what would you do if one of your tenants really did this? How would you react?

In this article, we will answer this question and provide you with tips on how to professionally respond to this situation.

How to React to The Call

The first thing to do if your tenant calls to inform you that they’ve just backed their vehicle into the rental property living room crashed it into the garage or swimming is to respond with compassion.

Showing compassion is important because you first want to verify that they are okay before asking them for all of the details for what happened.

Once they’ve told you all of the details, make sure that the police are called so that your tenant can give a statement, then you should take your tenant’s renters insurance and auto insurance information so that you can contact their insurance companies.

It’s also important for you to contact your landlord insurance policy as well because even though they may tell you that the responsibility lies on your tenants auto insurance company to pay for the damage, you should do your “due diligence” to make sure that your landlord insurance company has been notified of the damage to your property.

Filing Claims

During the process of contacting your tenant’s renters and auto insurance companies, it’s important to provide all of the facts about what happened then get the process started for having an insurance representative come out to your property to photograph the damage.

You may find that during the call with the renter’s insurance company that your tenant’s auto insurance policy is going to be responsible for paying for the damages so it’s important to “cover your bases” and call both insurance companies to confirm which policy is going to pay for it.

What Happens to Your Tenant?

If you had a good relationship with your tenant before the accident, the big question is what happens to them next?

Let’s say that the damage was only to the living room of your rental property, in this case, your tenant should be able to continue living in the property but if the damage also affected the bedroom, your tenant may have to find another place to live in the local area during repairs.

The good news is that if they have both renter’s insurance auto insurance policies, one or both of their policies may cover their temporary housing costs so that they can stay in a local hotel while contractors are repairing your rental property.

Are You Covered with The Right Insurance?

There are many reasons you might want to rent out your home on either a short- or long-term basis. Depending on the rental scenario, your standard homeowners’ policy may not cover losses incurred while your home is rented out, and you may require a more specialized insurance policy. So, whether you own a second home that you lease to tenants, want to rent out a spare bedroom in your house periodically though Airbnb, or make a little extra cash renting out your beach cottage the weeks you’re not using it, the first step should be to call your insurance professional.

Short-term rentals/Primary residence

If you are planning to rent out all or part of your primary residence for a short period of time, for instance, a week or several weekends, there will likely be two insurance scenarios.

Some insurance companies may allow homeowners or renters policyholders a short-term rental—assuming they have notified the company. Other insurers will require an endorsement (or rider) to the existing insurance policy in order to provide insurance coverage.

If you plan to rent out your primary residence for short periods on a regular basis, to various “guests.” this would constitute a business. Standard homeowner’s insurance policies do not provide any coverage for business activities conducted in the home. To be properly covered you would need to purchase a business policy—specifically either a hotel or a bed and breakfast policy.

Long-term rentals/Second home

If you are planning to lease your home to one person or a couple or family for a longer period of time, say six months or a year, you will likely need a landlord or rental dwelling policy. Landlord policies generally cost about 25 percent more than a standard homeowner’s policy to pay for increased protections. If you are regularly renting out a vacation home or investment property, this would also require a landlord or rental dwelling policy.

Landlord policies provide property insurance coverage for physical damage to the structure of the home caused by fire, lightning, wind, hail, ice, snow or other covered perils. It also offers coverage for any personal property you may leave on-site for maintenance or tenant use, like appliances, lawnmowers, and snow blowers.

The policy also includes liability coverage; if a tenant or one of their guests gets hurt on the property, it would cover legal fees and medical expenses.

Most landlord policies provide coverage for loss of rental income in the event you are not able to rent out the property while it is being repaired or rebuilt due to damage from a covered loss. This coverage is generally provided for a specific period of time.

Renters insurance

As the landlord, your coverage is only on the structure itself and your financial interest in it. Your tenant’s personal possessions are not covered under your policy. In order to avoid disputes arising from damage to the renter’s belongings, many landlords require a tenant to buy renters insurance before signing a lease.

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