If you own a property that you rent out to tenants, landlord insurance is a must. Work with an insurance expert to create a custom policy that addresses all of your unique risks.
Landlord insurance protects against damage to buildings and personal property, theft, and liability claims. There are several different policies, each with different coverages and limits.
Property Coverage
A landlord policy is customized to your property needs, and may include coverage for dwellings (houses or condo units), other structures such as sheds, personal property and loss of rental income. It also accounts for perils that can’t be covered by a standard homeowners insurance policy, such as water damage from sewer backups or earthquakes.
Landlord insurance is a necessity if you want to rent out a house or condo, especially when it’s not being used by your own family members. In addition to protecting the home, it protects you from liability if something goes wrong with the tenant, which can be expensive and time-consuming to resolve. It also covers expenses if the home can’t be rented, such as repairs from vandalism or fire. You can even add additional coverage for extra expenses like temporary living arrangements. It’s important to find an insurer that specializes in landlord insurance, as many general insurance companies do not offer it. Check out Cost-Effective Outsourcing Insurance Solutions for more information.
Liability Coverage
Owning property carries a lot of risk and landlord insurance helps protect your investment from financial loss. Landlord insurance offers protection in the event of damage to the property or injury to a tenant or guest while on the property. It can also cover loss of income if the property becomes unusable due to a covered problem like a fire or flood.
Liability protection covers you if you are held responsible for an accident that occurs on the property by a tenant, guest or repairperson. This type of coverage typically provides up to the stated limit on the policy.
Landlord policies can be customized with different add-ons for extra coverage, a lower premium or both. For example, Lemonade’s landlord insurance offers equipment breakdown coverage which pays to repair or replace leased appliances and electronics. It also covers your liability if you are responsible for damage to shared property like landscaping and walkways. Landlord insurance can even include a vacant property endorsement to cover the property when it is not being occupied by a tenant.
Renter’s Coverage
Landlord insurance is designed to protect the property from damage and other perils that might cause it to be unusable, such as fire, explosion, windstorm, earthquake, hail, falling objects, water leakage (caused by sprinklers or broken pipes), theft, and vandalism. It typically doesn’t cover tenants’ personal belongings, so it’s a good idea for them to get their own renters insurance policies, which will provide protection for the items they store inside the building or in outdoor areas like sheds.
Some landlord insurance policies include additional coverages that may be important for rental properties, including guaranteed income coverage and loss of use coverage, which steps in if an event makes the property unusable for a month while it is repaired. Other options can include legal expenses, contents coverage, and personal liability or medical bills coverage. Some insurance carriers offer the ability to scale up or down these features based on your needs and budget. Other policy riders that you can consider include flood insurance and a personal articles floater for high-value possessions.
Additional Coverage
Those who own and manage residential rental properties, such as single-family homes, duplexes or fourplexes may benefit from landlord insurance. This type of policy covers the dwelling and other structures (such as a fence), personal property, liability and loss of rental income. Most mortgage lenders will require landlord insurance for those who rent out a home that they own on a long-term lease.
Landlord insurance is typically more expensive than homeowners insurance due to the fact that it includes coverage for tenant-related damages and disasters and liability claims that are unique to rental property. However, this added protection is usually worth the additional cost.
Some common add-ons for landlord insurance include guaranteed rental income coverage, property damage from flood and water damage and additional structural damage coverage. While these add-ons aren’t necessary for all landlords, those who want the most comprehensive coverage should consider them. You can also often customize a landlord policy by dropping certain coverage types that aren’t applicable to your rental property, which can save you money on premiums.