What Your Landlord Policy Covers (And What It Doesn't!)

Hi, I'm Max McClure, I'm the Chief Insurance Officer at Steadily, and today we're going to be talking about the essentials of landlord insurance.

It depends if the damage was maliciously done and intentional — then it would be covered. If the damage was due to normal wear and tear associated with a rental property, it would not be covered. If there is something that happens to your rental property that is covered under the policy, it will trigger your loss of rental income coverage, which will reimburse you for lost rental income.

Flood damage is excluded in your typical landlord insurance policy; however, you can buy it separately. Talk to your agent about getting that separate coverage.

In the event that something happens at your property where someone is injured or you get sued, your policy will cover your defense cost, it potentially will settle with the other party, and it will help cover medical bills.

Every part of the building, every part of your rental property, every component — like the wood siding, the sheetrock inside — it has a lifespan. It doesn't last forever, and so you would expect over time for those things to deteriorate and need to be replaced at some point, and those things are not covered by your policy. Which is why it's really important to have a regular maintenance plan with your rental property and keep those things maintained.

So vandalism is covered on your policy. We have had scenarios where a landlord was in between tenants for 30 to 60 days while one tenant moved out and the next tenant moved in — maybe they were applying a fresh coat of paint to the rental property before the new tenants moved in — and during that interim period we have had scenarios where a vandal broke into that property and graffitied the walls, maybe poked some holes into the sheetrock. That would be a covered claim.

Unauthorized tenant alterations are not covered. Let's say a tenant moves out of your property, you go look at it after they've moved out, and they have painted the entire house lime green — which happens to be your least favorite color and is also a color that new tenants aren't a big fan of — and you decide you're going to need to repaint the entire house, which can be expensive. That would not be covered under your policy.

Earthquake damage is not covered. Earthquake coverage is going to be excluded on your typical landlord insurance policy; however, you can buy it separately. Reach out to your Steadily agent for help.

Sometimes your policy will cover legal fees and other times it won't. An example of a situation where the policy will not cover legal fees is if it is a business dispute. A Steadily insurance policy is not a business insurance policy, so if you get into a dispute with your tenant about paying rent — how much the rent is and whether it's been paid on time — that's not something that your insurance policy is going to get involved in. But if there was something that happened at your property, let's say that somebody got hurt or there was some dispute around the condition of the property that led to bad outcomes, that may be covered under your policy.

Off-premises liability coverage for short-term rentals is covered. Let's say you have bikes or kayaks at your short-term rental that you allow your tenants to take out on a lake or out into town if they want to go get some ice cream. Most insurance policies are not going to cover the activities that are off the premises, off the property. Steadily has coverage that provides liability protection for you when the tenants take those things and go do activities off the property, which is really important.

Similar to any business, it is really important to have a sound risk management strategy, which includes having a strong understanding of what your insurance policy covers and does not cover. I encourage you to look over your insurance declarations page. If you're uncomfortable doing that, I recommend you reach out to your agent or risk management professional to better understand your policy.

I am Max McClure, the Chief Insurance Officer at Steadily. Please reach out to steadily.com for a quote on your rental property.