Landlord Insurance is a special type of home insurance policy that covers the home owners from financial losses that they might incur with rental properties. This policy will cover standard fire and allied perils and also theft and malicious damage.
Information about Landlord Insurance
As the popular modern proverb goes, “The best investment on land is land”. Most of the times, a property is an asset whose value increases over time. It is no surprise that a lot of people choose to invest their savings in properties. Renting out properties have become the norm since home owners are not always able to occupy the properties that they own. But, the real question is whether the tenant will care for your house as you will do.
A landlord insurance will offer you complete peace of mind as it covers you from all the risks that you might face from renting out your property. In case your rental units become uninhabitable because of minor or major mishaps, a landlord insurance will help you cover the loss of rental income also.
What Does Landlord Insurance Cover
Your insurer may offer you any or all of the following coverage options when it comes to landlord insurance.
- Damage to Property
- Cover against Loss of Income
- Liability Insurance
- Add-On Coverage
This will cover the damage to the structure of the buildings and the personal property in case of fire, theft, storm, vandalism or tenant damage. In case of a total loss, your landlord insurance policy will ideally cover the replacement costs for your whole property.
Landlord insurance will help you recompense the loss of income in case your rental property becomes uninhabitable due to an insured loss like storm or fire. The rental reimbursement will prevent you from losing the rental income.
Liability cover under landlord insurance will help you cover the expenses, claims and lawsuits associated with a third-person bodily injury that happens on your property. If you are found responsible for other person’s damage as a landlord, liability insurance will cover you. For example, if you neglect to fix a rusty pipe and it destroys a tenant’s valuable documents, the tenant can file a liability claim can be filed against you. In such cases, a landlord insurance will cover you against the expenses that you will incur.
You can also opt for additional coverage such as natural disaster insurance, employer liability insurance, rent guarantee insurance and landlord contents insurance. The add-on covers offered can be customized as per your requirements.
Why do I need Landlord Insurance?
As explained above, a landlord insurance will cover you against property damage and also from liability claims. Let us consider a few illustrations that explain how landlord insurance works.
- Damage to Property
- Loss of Rental Income
- Tenant Damage
- Landlord Liability
In case an apartment fire accident occurs resulting in substantial damage, the landlord insurance will pay for the repairs and rebuilding. However, the property damage coverage does have set limits and you must be informed of the coverage limits. Also, you need to pay your insurer, the deductible amount before you can make a claim and get reimbursement.
If you property has faced a damage due to say, a lightning strike, it may take some time for you to repair the property. The insurance will compensate for the rent that you will lose because of repairs.
Sometimes the landlord insurance will also cover the damages done by a tenant. You can also secure a rental deposit when your tenant signs a lease agreement.
Let’s say a tenant or a visitor is injured because of an accident that happens on your property premises, like because of a broken stairway, you will have a liability claim. If the negligence is egregious, the third-party may file a lawsuit against you. The liability cover will protect you against the expenses that you might incur because of such incidents.
Importance and Benefits of LandLord Insurance
- Landlord insurance will guard you against the financial losses resulting from natural disasters, injuries, accidents and other liability issues.
- It will also offer reimbursement for loss of rent,
- Repairs and replacement of your property will be covered under landlord insurance.
- When you do not occupy your property and your tenant damages your property, you will have to spend from your own pockets which might prove to be costly.
- Normal home insurance will not cover the loss and damage to your rental property and will mostly not cover liability claims.
How Much Does Landlord Insurance Cost?
Some of the factors that affect the premium costs for your landlord insurance is described below.
- Size of the property
- Geographical location and known risks in the area
- Number of rental units
- Whether you have installed security systems like burglar alarms
- Type and Coverage amount offered by the landlord insurance policy
As a landlord, you have to prepare for more than a dripping pipe. It is your duty to safeguard your home, your most dear asset against any damage. A landlord home insurance will help you do the same and will also reduce your worry and expenses regarding any damage to the rented property.