Being a landlord is a great way to make a passive stream of income. You rent out a home, apartment, or another type of property for a monthly amount that covers the mortgage plus a little extra. There’s not much to do other than to collect rent. There are some risks in financial losses, however, which is why it’s important to cover yourself with landlord insurance. If you are wondering, “what does landlord insurance cover?”, We’ll explain it here.
Types Of Landlord Insurance Coverage
There are generally three types of losses that are included in most landlord insurance policies. These include:
Similar to a homeowner’s insurance policy, coverage includes damages that occur to the structure of the property. It also includes covered perils that may include fire, wind, hail, or snow. The property that you leave for the tenant to use on-site, such as kitchen appliances, may also be covered.
Another protection typically found in landlord insurance policies is a liability or medical coverage. This legally protects you if a person is injured while on your property. For example, let’s say a tenant falls and breaks their leg while they are on your property. If they sue you, your insurance company will attempt to settle the lawsuit on your behalf and pay the relevant costs after your deductible.
Loss of Rental Income
Let’s say that your home is damaged by a covered peril like a fire, as a result of which you’re unable to rent your property. Your policy could cover the loss of rental income.
Additional Coverage Options
You might consider some additional coverage options to add to your landlord policy based on the condition of your rental, geographic area, or the neighborhood. These optional coverages may include the options explained below.
The type of damage that occurs if your property is vandalized isn’t covered by a traditional landlord policy. Consider this coverage if you want help paying for vandalism damage.
Items that are stolen during a burglary won’t typically be covered, even if the items include a lawnmower, which you leave on the property to help maintain it.
Rental Property Under Construction
If you are getting ready to renovate an existing property or build a new one, consider adding this coverage. It will help protect it until it’s construction is complete.
Properties Covered By Landlord Insurance
Landlord insurance can help protect your property from sudden and accidental damage that’s associated with the property that you are renting. It might also protect the equipment that’s kept on-site that helps maintain the property and the property itself. Landlord insurance will typically cover the following:
Damage that’s caused by fire, lightning, hail, wind, and other covered losses on your rented property.
Detached structures that are on your rented property such as a fence or detached garage could also be included in your policy. If you experience damage that’s covered under the policy, it will help pay for repairs.
Personal Property That Services The Rental
Landlord insurance may also provide coverage for equipment that is left on the rental property which assists in the maintenance efforts. This could be equipment such as a lawnmower, snow blower, and weed wacker. Personal items like a bike are probably not covered in a landlord insurance policy.
How Landlord Insurance Works
The deductibles and limits on your specific landlord insurance policy and the actual coverage will vary. The amount that you must pay before your insurance kicks in to cover the remaining is what’s known as your deductible. The maximum amount that your landlord insurance policy will pay on a covered loss is the limit.
Generally speaking, each coverage will have a deductible and limit which is separate from the others. Oftentimes, you will be able to set what the deductible and limit amounts are for each of these types of coverages.
Landlord insurance doesn’t cover the personal property of your tenants like their furniture, electronics, and clothing. Your tenant should have renter’s insurance to cover themselves.
Who Should Acquire A Landlord Insurance Policy?
A landlord insurance policy is best suited for individuals who plan to rent out a home, apartment, or another type of property for more than six months. Traditional homeowner’s insurance policies are similar to a landlord insurance policy, but they are more tailored to landlords by protecting them from potential losses that stem from leasing out their property.
If you’re a homeowner who wants to rent out your primary residence for short periods of time, you might be protected by your existing homeowner’s insurance policy. For example, if you’re planning to spend the summer months on a vacation property and rent out your primary home. Contact your homeowner’s insurance provider to confirm your coverage.
Reach Out to Experienced Personal Insurance Brokers
Want to learn more about what landlord insurance can cover on your rental property? We’re here to help. Contact Merchant Family Agency today to get started.