No. Property owners are not required to have a landlord insurance policy to rent out their property. Though landlord insurance is not mandatory, we recommend that property owners seriously consider purchasing a policy in order to cover damages that come up from being a rental property owner.
When you have landlord insurance, liability insurance will be automatically included in your policy. This means you will be protected from legal fees and medical expenses in the event that a tenant or a guest is injured at your rental property due to a covered loss and comes after you for damages. Instead of you having to pay out of pocket for these expenses, your liability coverage will cover the costs. The amount your insurance company will cover will depend on the amount of coverage you chose to have when you purchased the policy.
This type of coverage protects the property itself from covered losses. For example, if your property is destroyed by a fire or tornado, or suffers significant water damage from burst pipes, your landlord insurance covers the replacement costs necessary to fix the property. The amount of coverage will depend on your insurance policy and the amount of property damage the building suffers.
Most landlord insurance policies also provide coverage in the case that a rental property is made uninhabitable due to a covered loss. For example, if you own an apartment building with multiple rental units and the majority of them are made uninhabitable due a fire, your insurance will cover not only the replacement cost for those units, but will also cover your loss of income for that period of time.
If you're in an area where you're concerned about break-ins or vandalism, or you're building out a new property and want coverage for that, landlord insurance has the option to add these types of coverage to your policy.
Whether you're a full-time or part-time landlord, your landlord insurance will be considered tax deductible, because it is a business expense.
No. In the event that your tenant's property is damaged or stolen, your landlord insurance will not cover the loss. For your tenant's personal belongings to be protected, they'll need to have their own renters insurance. A renters insurance policy will not only protect their property, it will also provide liability coverage in the event that your tenant is sued for damages due to their carelessness with your property. If your tenants have renters insurance will, your own insurance premium is less likely to increase.
Our recommendation is that yes, you should make sure your protected with landlord insurance. Not only will it provide you with coverage for if something goes wrong, it'll also give you a greater peace of mind. The upfront insurance cost may seem like a business burden now, but in the long term your landlord insurance will be able to save you from financial loss.