As a landlord, it’s important to consider all the ways you will need to protect your rental property, and by extension, your rental income — and that most likely will require a different type of insurance than a standard homeowners insurance policy. Determining if you should get a landlord insurance policy is something that most first-time rental property owners will debate.
Also called rental property insurance, landlord insurance is a very sensible investment for property owners, whether they’re only looking at a series of short-term rentals for a single-family unit or long-term rentals for a large apartment building. Lenders will often require this type of insurance before lending the money necessary for purchasing a rental property.
Landlord insurance covers situations ranging from paying for the replacement cost of the building in the case of a fire to providing liability coverage for legal fees if a tenant sues for damages. As long as it’s considered a covered loss, the insurer will provide funds depending on the amount of coverage that a landlord signed up for in their policy.
We recommend that property owners look into purchasing a policy from an insurance company because it will not provide coverage in the case of property damage but also for the peace of mind it will provide. Landlord insurance provides multiple coverage options that property owners can add depending on the property and location and is even tax-deductible, making it a safe investment for your business!
If you want protection for your tenant’s personal property as well, you’ll separately need to require that they purchase a renters insurance policy. This type of insurance is designed to protect the personal belongings of a renter in the event of property damage, vandalism, or theft, as well as provide liability protection to the tenant if they are sued for an accident on the rental property. In insurance terminology, theft and vandalism are sometimes referred to as human perils.
Requiring that your tenants have a renters insurance policy will also help lower your own insurance premiums because you will be considered a lower-risk landlord by doing so.
Want to know further?
Take a deep dive into how insurance companies record the premiums that you pay. Check out Earned Premium.