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.
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