Before answering what it doesn’t cover, it’s best to understand what it covers. That way, the differences are clear.
Landlord insurance covers damage to the building and gives liability protection if the landlord is sued. It excludes maintenance and equipment breakdowns and damage to a tenant’s personal possessions. People who own properties and rent them out should consider landlord insurance.
Landlord policies protect the property owner from financial loss. They have two key parts: property insurance and liability insurance protection.
Your landlord insurance policy will cover loss or damages to your building, but it also protects your financial interests in the property. A standard landlord insurance policy includes:
Landlord liability insurance helps protect against legal or medical costs. The liability insurance part of a rental property policy helps pay for a guest or tenant’s medical bills if they’re injured on your property, and you’re held responsible. This coverage will also help pay for your legal expenses if the guest or tenant comes after you for damages.
For example, say someone trips going down the stairs in a building and sues the landlord. A court might hold the landlord responsible for the tenant’s medical and legal costs if the stairwell lights were burned out. Here, the landlord’s liability coverage steps in to pay for the landlord’s legal fees and settlements or judgments.
Depending on the property’s neighborhood and condition, you may think about optional coverages such as protection for vandalism or burglary. For properties under construction or being renovated, you can get additional coverage to protect the building until it’s occupied and cover the extra costs of following building codes.
For example: If there’s a break-in and your property needs repairs, your landlord insurance policy will cover the cost if you’ve added the coverage. However, the type of insurance policy you have will determine if you receive the actual cash value (ACV) of the damaged property or replacement cost (RC). ACV considers depreciation, and RC would pay for you to get something similar today.
Individual policies offer different types of coverage, but here are a few common items that a landlord insurance policy will not cover:
The last two points raise three quick questions for many people.
Landlord and homeowners have similar coverage, but they’re designed for different policyholders. Landlord insurance protects properties that house long-term tenants, those who stay longer than 30 days.
Short-term rentals for an Airbnb or VRBO business would need a commercial, homeshare, or vacation rental policy. Landlord insurance usually has little personal property coverage, and the liability protection only deals with bodily injury or property damage claims that relate to the rental.
A standard homeowners insurance policy would only apply to your primary residence. The liability applies to both you and your immediate family, and the personal property protection gives a higher amount of coverage and is more comprehensive.
Many landlords require their tenants to buy renters insurance because it reduces several headaches and problems. Here are three reasons you may think of putting it in your lease:
It depends. Insurers categorize tenant damage in three ways:
Now that you know all about what landlord insurance covers, you might ponder the bottom-line.
You can expect your landlord insurance quote to be 25% more than a homeowners policy, according to the Insurance Information Institute. Insurance companies charge more because statistics prove renters are more likely to cause damage that results in a claim than homeowners. The average cost of landlord insurance was $1,478 in annual premium, and the average cost of homeowners insurance was $1,192, as of a few years back.
Ready to save, get the coverage you need and avoid unnecessary additional costs? Talk to one of our insurance agents today.
Insurance for landlords and tenants is all we do.Get started