Landlord insurance
When you own your home but live elsewhere, renting out all or a portion of it may appear to be a smart way to make some extra money. Don't assume your homeowners insurance policy will cover you if you rent out your home for a few weeks each year while you're away or if you bring in a full-time tenant. While most landlords purchase homeowners insurance to protect against certain types of property damage, it is usually insufficient coverage if you rent out some or all of your home.
Rather, many landlords opt to purchase a policy that protects them against specific types of losses associated with their rental property. Landlord insurance covers many of the same types of damages as homeowners insurance, but the key distinction is that landlord insurance covers the property while it is rented. A standard homeowners insurance policy, however, will not. When it comes to homeowners insurance, much of the coverage ends when the owner moves out. As a result, anyone considering renting out their home should educate themselves on landlord insurance.
What is landlord insurance?
You will need landlord insurance if you own a building or a portion of a building that you intend to rent out. Landlord insurance protects the structure of a home or condo when you, the owner, are not present. It also covers your liability, just like standard homeowners insurance.
Almost all homeowner's insurance policies only cover owner-occupied homes. If you are not living in your home, your policy is null and void.
Rental property insurance comes in a variety of forms. If you rent out your home to a full-time tenant, a standard landlord policy can provide the necessary protection. However, if you're only planning a short-term rental, you may only need to add an endorsement to your home insurance policy.
Speak with your insurance agent if you intend to regularly rent out your home to short-term guests. Your rental may then be considered a business, necessitating the purchase of a commercial insurance policy to ensure adequate protection.
Who needs landlord insurance?
Anyone who currently rents or intends to rent out their property will require landlord insurance. When a homeowner rents out their home instead of living in it, many of the coverages that come with it are no longer available. When this happens, landlord insurance is required to protect both the property and the tenants.
Renters are not generally held liable for many of the damages that can occur in a rental property. Instead, the property owner is usually held accountable. Of course, there are some instances where a tenant is held responsible, but these are rare. This is one of the reasons landlord insurance is so important.
Types of landlord insurance coverage
A standard landlord insurance policy provides a wide range of coverage. Each of these coverages has deductibles and limits, which vary between policies. Most landlord insurance policies cover the following:
Dwelling coverage
The landlord insurance policy, like a home insurance policy, protects the structure of the building against specific perils. Fire, wind, storms, hail, and lightning are all examples of covered threats.
One of the most important aspects of a landlord insurance policy is dwelling coverage. If something happens to the physical structure of your home, dwelling coverage may pay for repairs. For example, if a limb falls on the house and causes damage, dwelling coverage may be beneficial. Anyone who rents out their property will require this coverage.
Coverage for other structures
Other structures on your property, such as a detached garage or a fence, may also be covered by your policy. While not all properties have multiple structures, this is now a standard feature of landlord insurance policies. Those who do not have additional buildings do not need to be concerned, but those who do have detached structures should ensure that their landlord insurance policy includes this coverage. Garages, fences, and sheds are examples of these structures.
Liability protection
This section of your landlord insurance is critical. You are more vulnerable to risk when you have tenants living on your property. Fortunately, your policy covers your liability, so you can relax knowing that even if your tenant trips and falls and sues you, you're protected. Landlord liability insurance covers medical bills and accidental injuries. This is an essential component of any landlord insurance policy because property owners are generally liable for what happens on their property.
Personal property related to property maintenance
If you don't keep any personal belongings in your rental, you might not need this insurance. However, if you rent your building furnished or leave personal property — such as security cameras or lawnmowers — in place, protect it with personal property coverage.
Personal property that is not used for maintenance will not be replaced under this policy. For example, if you leave some old board games or a stereo, they are unlikely to be covered by this policy. Maintaining a homeowner insurance policy in addition to a landlord insurance policy, on the other hand, can ensure that any belongings you leave at the rental property are covered.
Loss-of-use coverage
Furthermore, some rental property insurance policies include loss-of-use coverage, which covers missed rent payments if your rental property becomes uninhabitable due to a covered peril. For example, if your tenant has to vacate for a month while you complete repairs following a fire, loss of use coverage can pay you the rent you won't be able to collect.
Examine your policy options and consult with an agent to tailor your landlord insurance policy to your specific needs.
Where to purchase landlord insurance
Obtaining a landlord policy is similar to obtaining any other type of insurance policy. Shopping policies from multiple insurance providers is the best way to understand your coverage options and ensure you're getting the best price.
Among the insurance companies that provide landlord insurance are:
- Allstate: Allstate connects you with a local agent who can assist you in customizing your landlord policy.
- Farmers: Farmers provides customization options to help you create the best policy for you.
- Geico: Geico provides both home and condo landlord insurance and has an online quoting tool to help you get started quickly.
- Liberty Mutual: The online quoting tool helps you start the process of securing coverage quickly and easily.
- Nationwide: The standard landlord insurance policies include loss-of-use coverage.
- State Farm: State Farm also provides coverage for rental homes and condominiums.
Some smaller carriers may also provide landlord insurance. Inquire with any potential providers if this is something they provide.
How much does landlord insurance cost?
Even if you're convinced you need this type of coverage, you're probably curious about the cost of landlord insurance. Prepare to pay more than the amount you paid for your home insurance policy. According to the Insurance Information Institute (III), landlord insurance costs about 25% more than standard home insurance.
Higher landlord insurance rates are due to the increased liability that comes with having tenants. Not only are they more likely to sue for slip-and-fall accidents, but renters are also more careless with maintenance than homeowners. This raises the possibility of an incident occurring on your property.
Getting quotes from multiple insurance providers is the best way to ensure you're getting the most affordable landlord insurance possible. Compare them to get the best deal on your insurance.