If you own property that is rented out to tenants, there are financial and legal risks that you are exposed to. Most people can’t afford the costs if something were to happen. That is why getting a landlord insurance policy is important. It can provide protection to cover a large unexpected expense, financial loss, or even legal trouble. To understand what insurance you need as a landlord, we’ve put together this guide.
Am I Required To Have Insurance As A Landlord?
Legally speaking, there is no requirement that a landlord must have any type of insurance. If you purchased the rental property by getting a loan, your lender will typically require that you have a basic homeowners insurance policy.
Some landlords will use a homeowners insurance policy to cover their rental property. This is especially common if the landlord had lived in the property previously. But a homeowners insurance policy will not cover damages that occur in your rental property. The only possible exception is that if you are living in the home and renting out a portion of it. You also will not have coverage against liability claims. The best way to protect your rental investments is to specifically get a landlord insurance policy.
It’s unlikely that if your property experiences $50,000 worth of damage that you would want to pay these costs out of your pocket if you don’t have the right insurance policy. Landlord insurance should be obtained when you do not occupy the same property as the tenant. If you are renting out your own home on a temporary basis, you will also need landlord insurance.
What Does Landlord Insurance Cover?
Landlord insurance helps protect owners from injuries or damages that are related to a rental property. The policy will vary based on the insurance provider and the options you choose, but generally, it will include providing protection from property damage, liability claims, and loss of income.
Your tenants’ belongings are not covered with a landlord insurance policy. This includes their cars, electronics, furniture, and other valuables. Encourage your tenants to get renters insurance to protect their personal property. Repairs are not included in basic landlord insurance. This includes fixing a broken refrigerator or heater.
Aside from a standard landlord insurance policy, there are other coverage options to consider. These options will depend on the type of property and where it’s located. Additional coverage options include:
- Vandalism – If vandalism is a concern based on where your rental property is located, this is an optional coverage that can be added to your policy.
- Burglary – Damage that occurs during a burglary might be covered. But if you want to cover the cost of items that are stolen, that is where adding burglary coverage is useful.
- Rental Property under Construction – if your rental property is undergoing renovations to get it ready for tenants, consider protecting the structure until it’s complete.
Property damage protection includes damage that occurs to the structure itself as well as to garages, fences, or other detached structures. This type of protection is often referred to as “dwelling coverage” by insurance policy providers. The covered property could be a single-family home, condo, or townhouse.
It protects against damages caused by lightning, fire, wind, storms, and other weather conditions. Just like homeowners insurance policies, you will need to get a separate flood insurance policy. Standard landlord policies will generally not cover flood damage.
Protection Of Personal Property
Many landlords will leave property on-site to be used by the tenant for maintenance. This could include appliances and lawnmowers. Landlord policies will cover a landlord’s personal property that’s left on the property.
But as discussed, a tenant should be encouraged to get renters insurance to protect their personal property. Landlords can require that a tenant obtain renter’s insurance as a part of the lease agreement. Renter’s insurance will help avoid conflicts about who should replace personal property if it is damaged due to a covered loss.
Another protection that a landlord insurance policy can include is liability coverage. If someone is injured on your property and you are determined to be at fault, liability protection will help cover the person’s medical bills or your legal expenses.
Loss Of Rent Coverage
If you are unable to rent out your property for some time because your rental property was damaged by a covered loss, you can be reimbursed with loss of rent coverage. This can help to make mortgage payments during this time that you can’t rent the home out.
Speak To Experienced Personal Insurance Brokers
To discuss the best coverage options for your rental property, talk to our friendly and experienced team at Merchant Family Agency. You can reach us by at 407.707.6418 or request a quote online today.