You are the proud owner of a first apartment that you are about to rent out. First of all, congratulations are in order! Cheer ! But if investing in real estate can effectively constitute a nice additional salary, this is not a reason to take the subject lightly. Because beyond doing what is necessary to repay your loan and bring in one or more rents each month, you might be tempted to take out Non-Occupant Owner insurance , better known by its nickname, PNO insurance. But what does it really cover and is it essential for you? Answer below…
First of all, let’s talk about what PNO insurance is. As its name suggests, non-occupant owner insurance aims to offer a number of guarantees and protections to real estate investors. Unlike classic home insurance, which protects your home, PNO only concerns property that you own, but that you do not occupy because you have rented it out. This is typically the case when you invest in an apartment or any other type of property. Your objective is then to obtain optimal profitability, by minimizing your monthly loan payments while maximizing your cash flow. But in this case, why take out non-compulsory insurance like the PNO, which will only lower your profitability?
Because yes, non-occupant owner insurance is not compulsory . You are the only master on board and the only judge to gauge the advisability of discharging this additional guarantee. But concretely, what does it cover that is not already covered elsewhere? Won’t it make double use with other insurances already in place?
Indeed, if you are the proud owner of an apartment, you are rather already well protected:
At first glance, we could then be tempted to say that PNO insurance seems quite useless and irrelevant. Indeed, the two insurances specified above seem to cover the entirety of your rental property, namely your apartment and the common areas.
But are you sure…?
It would be too simple, there is obviously a trap. I would even say that there are several. It would be a shame to fall into it, right? Whereas a simple non-occupant owner’s insurance would have saved you a lot of hassle. If you don’t mind, and to illustrate what I’m saying, we’re going to do a little exercise. I’m going to ask you a few questions and together we’ll try to answer them . For each point, you will be asked the same question: who will pay the bill? Let’s go ! 🙂
For the scenario, we will therefore say that you are the landlord owner of a small apartment type T3 in the region of your choice. The condominium is made up of three other apartments for a total of four owners, including you.
And yes, it’s for your apple! Unless you had the presence of mind to subscribe to a PNO. It is precisely in this type of case that non-occupant owner insurance comes into its own , protecting you from the inconveniences likely to arise when no tenant is in place in your property.
Another case where the latter can be interesting and which I touched on in case n°2. A non-occupant owner’s insurance can also take over when the loss observed in your apartment is not taken into account by the tenant’s home insurance in place .
I hope that these examples will have convinced you that subscribing to a PNO can save you some worries that you would have done without. But one question remains unanswered. A non-occupant owner’s insurance must be expensive, right? Of course, the answer to this question depends on many elements: type of property, other insurance taken out with the same organization, etc.
From my personal experience, it is an insurance accessible to all. For my part, I pay less than €250 per year for three three-bedroom apartments , all forming a complete apartment building and also being insured. And I didn’t even compete to find the best price… Yes, that doesn’t look like me 🙂 . Last interesting point: this amount is then fully deductible from your property income.
In view of all these elements, and even if it is not compulsory, I can only advise you to take out non-occupant owner insurance. It is inexpensive, tax deductible and above all, it will help you rest easy, even in the event of a rental vacancy !
For owners passing through the site, have you taken out an insurance policy of this type? Do you think this is necessary?