When it comes to insuring your rental properties, make sure that you are doing business with an agent that clearly understands your needs, as a landlord, because we are landlords. Owning rental properties gives us a clear perspective and the ability to present options that best fit your situation while offering the protection that you expect. Following, are some points that are often missed when dealing with an agency that is not familiar with the potential exposures and situations:
Considering renting out your home or investing in a small residential property with a couple of apartments to generate extra income? The notion may be intriguing, and becoming a landlord can be rewarding, but it’s a decision you’ll want to consider carefully to make sure your financial interests are protected. Consider this: your homeowners insurance typically won’t cover a variety of risks you’ll be exposed to once you decide to rent out a residential property that you own.
That’s where landlord insurance comes in. There are a number of ways to protect yourself. Here’s what you need to know about landlord insurance.
What Is Landlord Insurance?
Landlord insurance is coverage generally designed for owners of rental properties of one to four units, including apartments, condominiums, and single- or multi-family homes that you own and rent to others. It can help protect you from the potentially devastating costs of losses to your rental properties. It generally covers things like damage to the structures and can be customized to cover damage to systems, furnishings and appliances within those structures.
Believe it or not, you may be a landlord and not even realize it. For example, if you’ve been trying to sell your home without success and you need to make a move soon, you might decide to rent out your home for the time being. You may consider this to be a temporary solution to your housing dilemma, but guess what? Your renting action makes you a landlord, and that means your finances are at risk if something happens to the home or the tenant renting it.
If you’re renting out a property in any way, you’ll want to obtain the appropriate landlord insurance policy to help ensure you’re fully protected.
Homeowners Insurance vs. Landlord Insurance: What’s the Difference?
Homeowners insurance is generally designed to cover both your property and the people and belongings within it. Landlord insurance, on the other hand, generally covers the structure you are renting. You can add extra coverages to protect your household furnishings and appliances located on the property, or against the costs of injury or covered property losses at the home.
You may also want to ask your tenants to get their own renters insurance policy, which can help protect their personal belongings at the rental property in case of a covered loss.
How Much Landlord Insurance Should I Get?
The right amount of coverage depends on the size of your building, the cost to rebuild or replace it, and how many tenants and structures you have on the property. Furnished or unfurnished, your rental property presents a unique set of risks, and your insurance agent can help you weigh your needs and your budget to determine the right amount of coverage and which features are the best fit for you.
Some insurance carriers will let you customize your policy by scaling up or down your coverage based on your needs.
What Does Landlord Insurance Cover?
You can save money on your rental property insurance when you bundle your property coverage with Home, Auto or other policies like Boat or Umbrella Insurance or a Personal Articles Floater which covers high value personal items like fine art and jewelry. There are usually savings benefits when you choose to purchase more than one policy from the same company, so it’s worth a call to your insurance agent to ask about bundling your policies and other ways you can save on your insurance.
Does Landlord Insurance Cover Me for Legal Risks?
Landlord insurance is generally designed to cover damage and losses to the property itself, as well as premises liability, which can cover injuries and property damage to others that occur on your property. Landlord insurance also includes medical payments coverage, which can help with medical costs should someone be injured on your rental property.
There are also additional coverage endorsements you can add to help cover your furnishings, appliances, additional structures (such as sheds or garages) and more.
What Is Loss of Rent Coverage?
Loss of Rent insurance, also called “Loss of Use” coverage, protects you in the event your property is no longer a viable income stream due to damage or loss. If the rental property is damaged in a storm, for example, and is no longer inhabitable for tenants, then Loss of Rent coverage can compensate you for fair rental value of the property while it’s being repaired.
This coverage is subject to the terms and limits in your policy, so you’ll need to check with your insurance agent to ensure you have it and how much coverage is provided.
Do I Need Liability Insurance for My Rental Property?
Yes, and the good news is that liability insurance is included in your landlord insurance coverage. You may want to consider additional protection through an Umbrella Insurance policy, which provides extra liability coverage that can help protect you from liability costs that exceed your primary coverage as well as help cover defense costs, attorney fees and other charges associated with lawsuits.
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