Insurance Confusion. First time shopping

[Andrew Wong]

Ok, I'm just a little bit confused about exactly what insurance I need. After scrounging through the rental property book and online, I think I ingested too much information and need some clarity.

So I'm in the process of a obtaining turnkey SFH in Memphis. Long term rental is the plan. What insurance do I actually need?

Is there a difference between Homeowners & Rental? 

Should I tack on an Umbrella policy right away? 

I'm not in a flood zone, so I know I don't need that.

Any help sorting out my confusion is much appreciated!

[Jason Bott]

@Andrew Wong

A Homeowners policy is meant for "Owner Occupied" properties. 

You will want to state to your insurance agent that you have a rental property you want coverage for.  This policy can go by many names, depending on the insurance company.  Examples;  Landlord policy, Dwelling Fire, BOP, Rental Property policy.  Don't worry about the name of the policy as much as the coverages.

Insurance companies do not have a standard format, but they ussually offer the main coverages you need to consider, which are,

Property coverage/ Building Limit - Protects the property from Fire, wind, etc. (Perils) and sets a max claim payout on damage to the building.

Property Form / coverage form- This tells you which "Perils" you are protected against and which are excluded.

Liability limits - In case you get sued, you will have a $500k, $1M or $2M limit

Loss or rents/Business income - This replaces your rental income if the property is damaged by one of the perils in the coverage form

There are other secondary coverages that you may consider depending on your property, like Flood insurance.  Review those on a case by case basis.