What is Landlord Insurance
Landlord insurance is an insurance policy that covers a property owner from financial losses connected to rental properties. The policy usually covers the building, along with any contents inside that belong to the landlord.
Landlord policies will usually cover most natural disasters such as fire, lightning, earthquake, storm, theft, and malicious damage. Some policies also cover lost rental income if the house is damaged and uninhabitable, and some liability protection for the owner in case of injury or a lawsuit. If lost rental income isn’t included, you might be able to add the coverage for an additional $50 a year.
Most landlord policies will not cover the tenant’s possessions. For this reason, many landlords will require tenants get renter’s insurance to cover their personal belongings.
Of course each policy is different, so always check with your insurance agent for coverage details and be sure to read the fine print.
Why Do You Need It
Maybe you’re a real estate investor with multiple properties to rent.
Maybe you’re moving into a bigger home, and turning your old home into rental property.
Or maybe you’ve tried to sell your home without success and now you’re thinking of renting it out.
Whatever the reason, if you’re thinking about renting out your home, you need to look into getting landlord insurance.
Homeowners insurance covers your house if it burns down. It covers your possessions if there’s a break-in, and it covers medical and legal bills if someone gets hurt on your property. The problem is, it might not offer protection to you if you decide to rent out your home. That’s where landlord insurance comes in.
Homeowners insurance typically covers owner-occupied, single family residences. When your home doesn’t meet that definition any longer because it’s being rented out, it’s no longer covered.
The last thing you want to see happen, is for a disaster to occur and the insurance company deny your claim, simply because you were renting out your property, but never thought to get a landlord insurance policy, yet it happens all the time.
Most homeowners policies will cover an occasional short-term rental if, for example, you’re going out of town for a few weeks. But if you have a vacation home that you’ve decided to use as income property, that’s a lot higher risk for the insurance company.
When you rent your home out on a full-time basis, you have an increased responsibility for injuries on the property, whether it’s to your tenant, their guests, or anyone one else who happens to be at the home.
When you decide to become a landlord, inform your insurer and ask about your need for a landlord insurance policy. Expect to pay 15% – 20% more than you did for homeowner’s insurance, but the coverage is well worth it.
Also consider an umbrella policy that provides additional liability protection beyond the limits of your landlord policy if you own multiple rental properties. As always, when in doubt, ask your insurance agent.