Landlord insurance protects property owners against expensive costs that can arise from owning rental properties. It provides coverage for financial losses due to various risks, such as damages to the building and personal injuries of tenants.
In this article will discuss what landlord insurance is.
What is Landlord Insurance?
Landlord insurance is a type of property insurance policy that protects landlords from financial losses related to owning and renting out residential properties. It provides coverage for costs associated with damages to the rental building, liability claims from tenants, and loss of rental income.
Common types of coverage included in landlord insurance policies are property damage coverage, liability insurance, and loss of rents or loss of use coverage.
What types of property is landlord insurance for?
Landlord insurance typically covers multi-family residential properties like apartment buildings, single-family homes, duplexes, triplexes, fourplexes, and other small residential rental properties. The policy may also extend to other types of properties used for commercial rental purposes, such as small retail shops, office spaces, or mixed-use properties.
However, large apartment complexes or commercial buildings usually require specialized insurance policies better suited to their risks.
Related: What Does Landlord-Tenant Disposition Mean?
What kinds of damages are covered?
Standard landlord insurance offers property damage coverage for a variety of scenarios. Some common types of property losses covered include fire damage, water damage from burst pipes, storm damage from things like hurricanes or tornadoes, vandalism or theft, and falling objects.
Damage from more unusual events like civil unrest, explosions, and vehicles colliding with the building may also be covered depending on the policy details.
Does it cover liability from tenant injuries?
Yes, landlord insurance provides liability protection if a tenant or guest is injured on the rental property due to the landlord's negligence. The liability coverage kicks in to pay for costs associated with bodily injury claims, like medical bills.
Some policies may also extend liability coverage for incidents occurring away from the rental premises, such as if a tenant slips and falls on a sidewalk owned by the landlord.
Does it cover loss of rental income?
Many landlord insurance policies include coverage for loss of rents or loss of use. This protects the landlord's income if the property becomes uninhabitable, such as after a fire, and they are unable to collect rent. It pays the rental income amount for a set period while repairs are made.
Without this coverage, landlords would not receive rent payments when tenants cannot live in a damaged unit undergoing repairs.
What other optional coverages are available?
In addition to standard property damage, liability, and loss of rents coverage, landlords may add various other optional extensions to a policy. Some examples are earthquake coverage, flood insurance, identity fraud expense coverage, equipment breakdown protection, and additional living expense coverage to reimburse tenants’ housing costs if displaced.
Commercial policies for mixed-use properties may offer additional customized options as well.
How much does landlord insurance typically cost?
The cost of landlord insurance depends on many factors like the location and value of the rental property, the building's security features, claims history, and optional add-on coverage selections.
However, on average, basic coverage commonly ranges between $300-$1000 per year for a single-family rental. Larger multi-unit properties generally have higher premiums. Shopping around with multiple insurers can help find the most competitive quote.
Conclusion
Choosing the right landlord insurance policy is a crucial part of being a responsible property manager and landlord. It provides peace of mind knowing rental investments are financially protected. Comparing policies between insurers allows selecting the best price and coverages customized for an individual portfolio.
Landlord insurance ensures landlords avoid devastating costs from expensive tenant liability claims, property damages, and loss of income.
