What is Landlord Insurance? A Complete Guide

Landlord insurance is a particular type of property insurance that protects the building you own and rent out to others. Renters live in apartments, duplexes, single-family dwellings or some other kind of unit. This insurance is referred to as landlord insurance and is similar to homeowners insurance in some ways but functions differently. 

What Is Landlord/Rental Property Insurance?

Landlord insurance covers the types of risks you might experience when renting out units to tenants. In addition, the landlord insurance policy protects you as the building owner against any liability or losses on the property. 

Key Components of Rental Property Insurance

• Property insurance
• Liability protection
• Personal property
• Loss of income

Important Landlord Insurance Terms and Definitions

Insurance terms can be confusing for those not working within the insurance industry. Here are some definitions for terms commonly heard related to landlord insurance:

Deductible

The deductible on your policy is the amount you will have to pay out-of-pocket before the insurance company begins paying toward any claim.

Policy Limit

The policy limit is the maximum dollar amount your landlord insurance policy will pay during your policy period. Each type of coverage in the policy may have separate deductibles and limits.

Dwelling

The dwelling is the physical structure of the home, apartment or other types of buildings you rent out to tenants.

Other Structures

Other structures can be fences, detached garages or other parts of a rental property.

Liability Coverage

Liability coverage pays for legal expenses if you are found legally responsible for someone being injured on your rental property.

Exclusions

Exclusions are things that are not covered by your landlord insurance policy, such as flood damage and earthquakes.

Named Perils Coverage

Named perils coverage only covers perils specifically listed as covered by the landlord insurance policy.

All-Risk Policy

An all-risk policy covers any risk that is not explicitly excluded by the rental property policy.

What Does Landlord Insurance Cover?

Your landlord policy will protect you from various types of losses you may experience while renting out your property to tenants. Here are some of the types of coverage provided by your landlord insurance policy (subject to the policy’s specific deductibles and limits):

• Property insurance: The property or dwelling portion of the landlord insurance policy covers damage to the structure or any detached structures caused by a covered loss such as fire, wind, hail, or lightning.
• Liability protection: If someone is injured on a property that you are renting to tenants, the liability portion of your landlord insurance policy will pay for medical bills and any legal expenses you may incur if someone sues you for damages.
• Personal property: The personal property coverage in your landlord policy does not cover the tenant’s property they have inside the unit. The policy covers any property you keep on the rental site to use for maintenance of the building. However, landlord insurance does not cover your items that you may leave behind if they are not used for maintenance, such as a mobile device.
• Loss of income: If your rental unit is damaged and becomes uninhabitable, loss of income insurance included in your landlord policy pays for the loss of income while the unit is being repaired. This coverage is also sometimes called fair rental income protection. If fair rental income coverage does not come standard with your policy, endorsement can often add it.

Other Types of Rental Property Coverage to Consider

You can add different types of rental property insurance if you need more coverage than the standard landlord policy covers. The most common types of coverage that can be added to landlord insurance by an endorsement include:

• Vandalism: Vandalism is an optional coverage that can help you pay for damages if vandals break in and damage your rental structure. 
• Property under construction: If you are building or renovating a rental property, you can purchase additional coverage to cover any losses before the building is ready to be occupied by tenants.
• Fair income rental insurance: Fair income rental insurance is coverage to pay for lost income if your rental unit becomes uninhabitable. You can add loss of income coverage if it is not a part of the standard landlord insurance policy.
• Flood insurance: Landlord policies rarely cover flooding. You will need to purchase a flood insurance policy through the National Flood Insurance Program (NFIP) to protect your property against flood damage.
• Building codes coverage: You can purchase additional coverage if you have to bring your rental property up to current building codes after you’ve suffered damage and need to make repairs.

Rental property insurance pays for several types of losses you may experience while renting out your property to tenants, but some items are excluded from coverage:

• Mechanical breakdown or maintenance: If you have equipment that breaks down while renting a unit like a stove or a dishwasher, landlord insurance will not cover this. Maintenance on a home system, like heating and cooling, is also not covered.
• Renters’ personal property: Your tenant’s personal belongings are not covered by your landlord policy. Tenants will have to purchase a renters insurance policy to help pay for their personal property if they suffer a loss by a covered event like a burglary or fire.
• Shared property: You can’t purchase a landlord policy if you only rent out a portion of your home to another individual, like a bedroom. The landlord policy only covers nonowner-occupied property.
• Flooding: A landlord insurance policy doesn’t include flood damage caused by a natural disaster. If you are in a flood-prone zone, you should consider adding flood insurance.

Is Rental Property Insurance Required by Law?

You are not required by law to purchase rental property insurance. However, if you have a mortgage on a rental property you’ve purchased, your mortgage provider may require you to purchase rental property coverage. 

Can a Landlord Require a Tenant to Carry Renters Insurance?

A landlord can require tenants to carry renters insurance if the requirement is included in the lease agreement in all states except Oklahoma. The portion of the rental agreement stating a tenant must carry renters liability insurance must be added before the tenant signs the agreement. 

How to File a Rental Property Insurance Claim

1. Inspect the damage: Make sure everyone is safe and then look for damages to your rental property.
2. File a police report if needed: If you’ve suffered a theft or break-in to your property, file a police report for any damages or items stolen.
3. Document the damage: Use a video recorder or camera to take videos or photos of the damage and write down any details about items damaged.
4. Report the damage: Contact your insurance company or insurance agent to report the claim.
5. Get ready for the adjuster: Wait to hear from the insurance company when the adjuster will come to review the damages. Then, do not make any repairs or move anything until the adjuster arrives.

Compare Rental Property Insurance

Try Steadily Landlord Insurance

Steadily offers a simple, quick and affordable form of landlord or rental property insurance that you can use for your:

• Rental Home
• Airbnb units
• Apartments
• Duplex 
• Units under renovation
• Vacant/unrented units and more 

Answer a few questions when you start on the platform, get the coverage you need, sign your documents and bind coverage in your own time. Plus, you can complete the process on the phone or via SMS so that you’re not driving halfway across town to sit in an insurance agent’s office. Yes, the firm is relatively new, but Steadily is available in all 50 states and you can give them a try today.

Try Obie Insurance

If you need a diverse range of insurance policies and quality customer service, try Obie. With Obie, you can insure:

• Single-family homes
• Duplexes
• Multifamily housing
• Small or family-owned portfolios
• Large, institutional portfolios

Plus you can get a quote in 2 minutes and save up to 25% over traditional insurance plans.

Protect Your Rental Property Investment With the Right Coverage

Without rental property insurance, you are leaving your investment unprotected and putting yourself at financial risk. Explore all your options for landlord insurance and compare your options carefully to find the most comprehensive coverage for the lowest price. 

As always, come back to Benzinga for the latest information about home insurance and real estate investments.

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