If you're a landlord then you always have something to think about. Either you're looking for the right tenants, doing repairs, or one of the many other things on your to do list. One of the major things that people are concerned about when they own a rental property is a loss of income if the property needs serious repair work.
If your tenants can't stay in the property, then they won't pay the rent which means you will have to pay out of pocket to cover the mortgage on the property. I'm sure that's not what you had in mind when you decided to become a landlord.
Thankfully, landlord insurance can help you cover your property from damages and you from losing income if the damages make the property temporarily unlivable.
Also Read: 15 Types of People Who Need Umbrella Insurance
What is landlord insurance?
Landlord Insurance is a little different than homeowners insurance. Why? Landlords have a much different risk factor when it comes to owning and protecting a rental property. The typical landlord insurance policy will address a number of risks that are highly specific to a landlord, which we will cover later in this post.
A landlord faces the risk of damage to property, as well as injury to the tenant that will not be covered in the average homeowners insurance policy
Do You Need Landlord Insurance?
Many new landlords will ask if they even need landlord insurance for rental property and often they don't end up running into any serious issues with the property. But not having the right is a huge risk, not only to you, but to your family as well as the tenants in the property.
It's vital that you understand the risks you run by covering a property with a homeowners policy instead of having a landlord insurance policy for your rental property. So, instead of trying to convince you, here's 8 things that should help you see the importance of having a landlord policy.
Landlord Insurance VS. Homeowners Insurance
The long and short of it is that if you have a tenant for more than one month they will likely be considered a long term renter. Rental Property is very different from a home that is occupied by the owner from an insurance standpoint.
A non-landlord tenant (the homeowner who lives in the home) has a much different risk profile than a renter. Some of the 8 risks stated above can be reduced if you require a copy of the tenants renters insurance but even then you still have a great deal of risk placed on your shoulders.
What Does Landlord Insurance Cover You For?
You get landlord property protection, which usually covers the dwelling, other structures like detached garage or fence, and any personal property used for maintaining the rental like lawn mowers and snow blowers.
You also get Landlord liability protection to help pay for another person's medical bills or your legal expenses if someone gets injured in your rental property and you are found to be responsible.
As optional coverage you can add:
Landlord Insurance usually doesn't cover equipment breakdowns, shared property or the tenants belongings.
Does Landlord Insurance Cover Tenant Damage?
"Does landlord insurance cover tenant damage?" is one of the most common questions that potential landlords typically ask.
The answer... It depends.
The actual damage must be covered in your policy and in some cases a tenant can damage a property without it being covered.
An example of what would most likely be covered? If the tenant has a kitchen fire that damages the property. You will still need to pay your deductible before your insurance benefits are in effect but after that you should be covered.
If your tenant were to vandalize the property, however, you would not be covered unless you purchased additional vandalism coverage.
Also, your tenants belongings will not be covered unless they have their own renters insurance policy
Read More: How To Insure Rental Property
Does Landlord Insurance Protect Commercial Rental Properties?
Typically speaking, landlord policies don't cover commercial property because these types of property carry a much different types of risks. Call us if you need more information about covering a commercial rental property.
Rental Property Insurance for Multiple Properties
Multifamily rental properties can be a little more complex. Many insurance companies will write coverage for a single family home or a duplex but once you go past two units it becomes a little more difficult to find insurers if it is owned under a personal name. If owned through a business entity, some companies will insure small apartments over 6 units.
To fully understand your best course of action, call us for a free consultation.
Temporary Landlord Insurance
If you are a landlord that wants to try your hand with short term rental apps like Airbnb, then you probably know that they have a "host guarantee" that promises to pay up to $1 million to a host for property damage caused by a renter.
Be aware that this guarantee is not insurance.
And if your insurance company finds out that you're frequently renting your home short term to paying guests, they will most likely claim that you are running a hotel or bed and breakfast business, which isn't covered under your policy.
If you plan to run a short term rental business be sure to call us for a free consultation so that you have all of your liabilities covered when you start.
How Much Is Landlord Insurance Per Month?
The simple answer is that landlord insurance coverage is typically 20% more that your homeowners insurance policy would be for the same property. That being said, there are many times that it would make sense to look at adding more coverage to make sure that all of your risks are covered.
For example, if you have a home in Chesapeake, Va that you lived in an paid $1,068 per year for homeowners insurance, you would be looking paying about $1,281 per year for landlord coverage.
When you consider the monthly increase in our example, your payments only go up from $89 to $106, the increase
Your actual rates will vary based on the homes age, how it's built and other factors so rather than estimate you should just call us so we can help you find the rate that you will actually pay.
What are Typical Landlord Insurance Rates?
Landlord insurance is slightly more expensive than homeowners insurance. The good news is that it's also tax deductible because it's considered an expense related to running a business.
If you are having a hard time nailing down an estimate of what you could pay for landlord insurance give us a call at 1 (888) 258-8808 for a free consultation or get an online quote today
Congratulations! You’re a landlord. Whether by choice or out of necessity, being a landlord can present plenty of new obstacles and challenges for anyone who is renting out their first property.
The good news is that the rental property can give you a good way to make extra income on the side.
The bad news, it’s going to require you to have a strategy for dealing with the unforeseen stumbling blocks in your new venture.
If you are going to be a landlord you need to know a little bit about the risks that you will potentially face and how you can protect yourself from them.
Here are some things you should consider...
Also Read: 15 Types of People Who Need Umbrella Insurance
Landlord Insurance VS Homeowners Insurance
There is a time to keep your homeowners policy in force and there is also a time to switch to a landlord policy.
Typically speaking, a landlord policy is best for covering a home that you plan on renting out full time. If you are just renting during vacation season or just inconsistently, a homeowners policy will typically take care of your needs.
Difference Between Landlord Insurance And Home Insurance
The primary difference between landlord insurance and home insurance is that landlords face a new and wider spectrum of liability. For example, if a tenant or their guest are injured on a rental property that you own then you likely won’t be covered under a homeowners policy.
If you are held responsible in that scenario, you would potentially face paying medical expenses and other expenses out of pocket.
Landlord insurance gives you a much more protection when it comes to these types of situations.
What Is Landlord Insurance?
According to wikipedia, landlord’s insurance is…
An insurance policy that covers a property owner from financial losses connected with rental properties.
These policies normally cover the typical hazards that property would potentially face like fires, storms, floods and more. However, you should also consider including extra coverage options such as malicious damage by tenant, legal protection and more.
What Doesn’t Landlord Insurance Cover?
Typically, landlord insurance doesn’t cover the tenants personal belongings or the interest of the tenant. However, in the case of liability, the policy protecting a landlord or property manager will benefit the tenants if they have a loss that the landlord is responsible for.
What Does Landlord Insurance Cover?
With all of the similarities between landlord insurance and homeowners, you may be asking yourself, “Is landlord insurance necessary?” or “What do I need landlord insurance cover?”
Let’s look a little closer at what a landlord policy has to offer.
Does Landlord Insurance Cover Tenant Damage?
An optional coverage that you might include helps to cover damages by the tenant. This will help you make most repairs that are not related to the wear and tear of the property or the equipment in it, like washing machines and stoves.
Also, if a disgruntled tenant vandalized your property your policy typically will not cover those damages. So you will most likely be paying to cover spray painted walls yourself.
Does Landlord Insurance Cover Loss Of Rent
Sometimes an emergency situation like a fire or storm will cause you to lose rents due to damages that make the property uninhabitable. If you have rent guarantee insurance you will be covered against loss of rent.
If you pair that with alternative accommodation costs you could recoup many of those out of pocket expenses should you run into unexpected damages to your property.
Is Landlord Insurance More Expensive Than Homeowners?
A few different factors are calculated into the price you would pay for landlord insurance but as a general rule of thumb, you can expect to pay about 20% more for a decent landlord policy to cover your rental home.
However, you could actually spent more depending on the rental term and how much extra coverage you need to protect yourself from loss.
Average Price Of Landlord Insurance
To be 100% transparent, there is no such thing as “average” when it comes to a landlord policy. Sometimes, you end up with a quote that has a lower price on coverage than your original homeowners policy and sometimes it is higher.
The difference in price is because typically landlord insurance is a la carte'. You can get dwelling coverage and a few extras and have a low rate but still end up improperly insured.
That’s why it’s important to add up all the factors before you fall in love with the price of your landlord policy.
Landlord Insurance For Multiple Properties
Getting landlord insurance when you have multiple properties is highly important but can also be somewhat challenging. Not all insurance companies offer protection to cover multiple properties so finding the right company is going to take some effort if you are not using an agent who works with multiple insurers.
Once you find the right companies, you can start asking for quotes to find the best rates for the coverage you need. Choosing a policy based on price alone could cause you a serious headache if you file a claim in the future. You could lose big if you don’t have the proper coverage just to save a few bucks.
Insurance For Apartment Buildings
Insuring an apartment building is a horse of a different color in a sense. While you stand to gain a much higher financial reward, you also face a great deal of risk. You can expect to have the same problems as a typical landlord but you are also need to protect yourself from potential loss and liability that you can expect to see in a typical business.
You will need to look at your apartment building from a different set of eyes. With apartment buildings, you are technically no longer a landlord but you are a business owner and as such you need to consider your need for a business insurance policy.
Short Stay Landlord Insurance
If you are running an AirBnB service through your property or some other short term vacation style rental, then you are going to run into issues if you use a homeowners policy or even landlord insurance coverage because short stay rentals are typically considered a business.
Most landlord/ homeowners policies have an exclusion for “business activity”. When you have a long term rental lease in effect it is not actually considered a business activity. If your tenant slips in the bathtub it isn’t the landlords fault because on a long term lease the tenant is responsible for that type of maintenance. That’s not the case with AirBnB type short term rentals.
The good news, though, is that you won’t need a homeowners policy as long as you add personal liability to your business policy.
How Much Landlord Insurance Do I Need
The amount of landlord insurance you will need is in direct proportions to the amount that it will cost to replace the building and the contents owned by the landlord.
This means that it all depends on how much it cost to rebuild your property and on the cost to replace things like the refrigerator or washing machine in the unit(s).
Going forward, it’s important to understand that the market value of the property IS NOT the same as the rebuild costs. Rebuild cost include materials and labor, market value is based on the amount people might be willing to pay to purchase it in a reasonably good condition.
Cost Of Landlord Insurance
As you might have guessed the rebuild and contents cost are heavily factored into the overall cost of landlord insurance.
It could cost just as much to rebuild and replace contents for a $500,000 rental property as it does to rebuild and replace content on a $200,000 property in a different state.
If labor costs and material costs are higher in one area or state than another it will affect the cost of your landlords’ insurance policy.
Ultimately, you should know that each individual property could present a different amount of risk.
Get A Landlord Insurance Quote
Getting a landlord insurance quote based on your specific situation is vitally important if you are serious about protecting yourself and your family from financial loss.
Get a landlord insurance quote online from us today or call us at 1(888)258-8808