Getting Insured: What Landlords Should Know

As a property owner, it’s normal not to want to think about the worst-case scenarios that your property might face, including burglaries, fires, and other natural disasters.

When the unpredictable happens, though, you’ll be glad to have insurance as financial protection.

If you’re a new landlord, you probably don’t have a ton of funds at your disposal. With that being said, it’s crucial that you prioritize insurance among your monthly expenses. You never know when you might need it.

There are two different kinds of insurance all landlords should know about: landlord insurance and renters insurance. This article will go over what you should know about both.

A landlord Insurance is a comprehensive coverage that offers financial protection to landlords renting out their property. It is designed keeping in mind the interests of the landlords so that their property and contents of the property are insured against untoward incidents.

What is Landlord Insurance?

Landlord insurance is a type of insurance strictly limited to rental properties. Furthermore, to qualify for landlord insurance, you must own and be responsible for the entire building and structural components of the property you rent out.

Landlord insurance policies generally cover the following three kinds of losses:

1. Property damage – This includes damage from fires, storms, lightning, wind, or criminal break-ins. It also covers personal property you may store on the rental property, such as a lawn mower or cleaning supplies.
2. Lost rent – If physical damage to your property renders the property uninhabitable while repairs are being made, you may receive reimbursement for the lost rent the vacancy is causing.
3. Liabilities – This covers legal claims a tenant or guest makes against you or your company. If a tenant gets injured on your property and insists you are to blame, you may have to pay their medical or legal fees. Landlord insurance policies will generally cover these fees.

Landlord insurance policies usually don’t include flood or eviction insurance, although you can purchase coverage for these two types of losses separately. Many insurance companies also offer add-ons, such as coverage for damage or vandalism during construction, which influence your quote for landlord insurance.

Finally, landlord insurance doesn’t cover your tenants’ belongings. This is where renters insurance comes in.

Benefits of Landlord Insurance

A rental property is a valuable investment, and as such, you should do everything in your power to protect it. Furthermore, a rental property generally comes with more risk than property you’re the permanent homeowner for. Insurance helps make sure that you don’t take more risks than you have to.

Additionally, many lenders require you to have landlord insurance, which means that you may need to purchase a landlord insurance policy to get the best mortgage.

Finally, insurance premiums are fully tax deductible. This means you can deduct your monthly insurance payments as operating expenses and pay less in taxes.

Landlord insurance is a type of insurance strictly limited to rental properties. Furthermore, to qualify for landlord insurance, you must own and be responsible for the entire building and structural components of the property you rent out.

What is Renters Insurance?

As previously mentioned, landlord insurance doesn’t cover your tenants or their belongings, which is why they should have renters insurance.

Like landlord insurance, renters insurance covers three kinds of losses:

1. Personal property – This covers damage or loss to tenants’ belongings, such as clothes, furniture, and electronics, in the event of a fire, storm, theft, etc. You should encourage your tenants to make a list of all their belongings before moving in because they’re typically subject to coverage limits and require a deductible.
2. Liability – This covers injuries or damage to the property that the tenant is responsible for.
3. Loss of use/living expenses – If a tenant must move out of a unit that’s temporarily uninhabitable, this covers their hotel bills or certain food expenses. 

Benefits of Renters Insurance

One of the nicest things about renters insurance is its affordability. On average, the cost for renters insurance is only about $15 per month. Given how much renters insurance can save your tenants in the event of a disaster, the low cost is well worth it.

Renters insurance not only protects your tenants, but it also protects you. Furthermore, in the event that an accident does occur, your tenant’s renters insurance policy will kick in before your landlord insurance policy, which will oftentimes save you the trouble of interacting with your insurance company.

Landlord insurance is a type of insurance strictly limited to rental properties. Furthermore, to qualify for landlord insurance, you must own and be responsible for the entire building and structural components of the property you rent out.

For these three reasons, it’s a good idea that all landlords require their tenants to purchase renters insurance.

Conclusion

While the possibility of accidents, theft, or disasters isn’t a fun thought to consider, it’s a necessary one. By purchasing landlord insurance and requiring your tenants to purchase renters insurance, you’ll be protected from the worst-case scenarios that could come your way.