What Does Landlord Insurance Cover?
Landlord insurance is a policy for someone who rents out a home they own. This type of insurance typically includes two different types of coverage: property protection and liability. Both coverages are intended to help protect you, the landlord, from financial loss.
Property protection in renter’s insurance usually helps cover physical property related to the home you’re renting. This can include the dwelling itself and the equipment you have in place to maintain it. Coverage generally includes:
Dwelling
This coverage helps pay for repairs to your rental home, condo or apartment if it is damaged by fire, lightning, wind, hail or other covered losses.
Other Structures
This part of your policy helps pay for the repair of detached structures on your rental property, such as a detached garage or fence, if they are damaged by a covered loss.
Personal property used to service the rental
If you leave a lawnmower or snowblower in place to maintain the rental property, your landlord’s insurance may help cover the equipment if it is damaged. However, if you leave your personal bicycle or DVD player in the home you rent, your landlord’s policy probably won’t cover it.
All of the above types of coverage are subject to the deductibles and limits set forth in your specific landlord policy. Your deductible is the amount you pay for a covered loss before your homeowner’s insurance kicks in. A limit is the maximum amount your policy will pay after a loss is covered. Each coverage usually has its own, separate deductible and limit. You may be able to set your own deductibles and limits for these coverages.
Landlord Liability Protection
The landlord’s liability insurance portion can help you pay another person’s medical bills or legal fees if someone else is injured on your rental property and you are found liable.
For example, if your tenant falls down in your rental property and the court decides that you failed to maintain the stairs and/or railings, you may be liable for your tenant’s medical, legal and other expenses. In that case, your landlord’s liability coverage can help cover these expenses up to your policy limits. You usually won’t pay a deductible for a liability claim.
Special Landlord Coverage Should Be Considered
Depending on the neighborhood, geography, or terms of your lease, you may want to consider adding some optional coverages to your landlord’s policy. These covers may include:
Vandalism
You may want optional coverage to help you pay to repair damage caused by vandalism. If your property is vandalized, this type of damage is usually not covered under traditional landlord policies unless you purchase vandalism coverage. This optional endorsement adds protection to your home, other structures and contents against vandalism. Any vandalism that occurs after the property has been vacant or unoccupied for 90 days or more is excluded.
Burglary
Standard renter’s insurance can help pay for repairs to your home’s exterior and interior windows or doors if they’re damaged in a burglary, as long as the home hasn’t been vacant or unoccupied for 90 days. An optional burglary endorsement adds coverage for all damage caused by thieves illegally entering the building, as well as damage to personal property. This optional endorsement adds the specified burglary risk for damage to personal property caused by a burglar illegally entering the building.
Renting a Property under Construction
Are you liquidating or renovating your rental or building a new home? You may be able to purchase additional coverage to help protect the structure until it is ready for occupancy.
Building Regulations
If you’re repairing or replacing part of your rental after it’s been damaged, you may be legally required to upgrade items like wiring or ventilation, says the International Risk Management Institute. This is because city or county codes may have changed since your property was originally built. This coverage can help you defray those extra costs.
Talk to your insurance provider to find out what optional coverages may be available and help understand how they can protect you as a landlord.
What Is Not Usually Covered by Landlord Insurance?
While renter’s insurance can help cover expenses resulting from a few sudden and accidental losses, you’ll likely find that some things are excluded from insurance coverage. Landlord policies may not apply to:
Equipment Maintenance and Breakdowns
If the furnace or dishwasher in your rental property breaks down, you may have to pay out of pocket for the necessary repairs or replacements.
Property You Share
If you live on the property and rent out a room or other floor to a tenant, you usually don’t qualify for a landlord’s policy, according to the National Association of Insurance Commissioners. The Landlord Policy is designed for “Owner Vacant” properties. Talk to your insurer about whether you can add coverage to your homeowners policy for the portion of your property that you rent.
Tenants’ Stuff
Landlord insurance generally does not cover your tenant’s personal possessions (electronics, clothing, etc.). For this protection, your tenants will need to purchase their own renters insurance. Some landlords require tenants to provide proof of renter’s insurance before a lease is approved. This helps renters pay to repair or replace their personal belongings, such as furniture and clothing, if they are damaged by a covered peril, such as fire or theft.
Are you ready to rent out the property you own to tenants? An insurance provider can explain what options are available so you can choose the insurance that’s right for you.
