If you rent out a property—whether it’s a single-family home, duplex, or apartment—you need more than a standard homeowners policy. Landlord insurance is specifically designed to protect rental property owners from financial losses caused by damage, liability claims, or loss of rental income. In this article, we’ll explain what landlord insurance covers, how it works, and why it’s a smart investment for anyone managing rental real estate.
What Is Landlord Insurance?
Landlord Insurance
When you own rental properties such as a house or condominium unit that you rent to others, you'll need to purchase a property insurance policy called a dwelling fire policy, or landlord insurance. This type of insurance policy protects your rental properties and your tenants and can save you from the financial headache that can follow an unexpected event. A-MAX understands this and will provide you with quotes from the best landlord insurance companies so you can find the right amount of coverage to fit your budget and protect your rental with just a few clicks. Contact us for a free quote today!
What is Landlord Insurance?
A landlord insurance policy, also called a dwelling fire insurance policy, is a contract between a property owner and an insurance company that provides financial protection to the property owner in case the house or condominium unit is damaged in a claim, or their tenants or others are injured or become ill due to the owner's negligence. The property owner pays an agreed-upon premium to their landlord insurance carrier so that the carrier will respond after a loss involving the insured property and pay certain expenses based on the coverages selected on the policy.
What Does Landlord Insurance Cover?
Landlord insurance protects you and the house or unit you rent to others against potential losses. Landlord insurance coverages include:
Dwelling Coverage: This covers the structure of your rented house including the walls, floors, roof, interior building materials like flooring, tile, and cabinetry, as well as structures that are attached to the house like a deck, porch, or attached garage.
Other Structures Coverage: This covers any structure on your rental property that is not attached to the house such as a fence, shed, or detached garage.
Interior Building Items Coverage: If your rental is a condominium unit or townhouse, your landlord insurance will cover the interior building items within the unit including sheetrock, wallcoverings, moldings, flooring, permanently installed appliances, and more.
Personal Property Coverage: This covers damage to any belongings you own in or on the rented property.
Loss of Rental Income Coverage: This covers the rent that you are unable to collect while the house is not habitable after a covered claim.
Liability Coverage: If you are sued by a tenant or someone else who has been injured on your rental property due to your negligence, this coverage will be made available to settle the lawsuit up to the policy limit.
- Medical Payments Coverage: If your tenant or someone else is injured on the property, this coverage will pay for their medical expenses resulting from the injury up to the policy limit.
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Read MoreDoes My Tenant Need Renters Insurance?
Rental property owners should require their tenants to purchase renters insurance and the landlord should retain proof of their coverage, often called a certificate of insurance. Landlord insurance does not cover your tenants' personal property. If a claim on your rental property damages your tenants' belongings, your tenants must file a claim through their renters insurance policy for their damaged belongings. Also, a renters insurance policy provides your tenant with liability coverage, which will respond if someone is hurt on the rented property due to your tenants' negligence, rather than your negligence, or if they cause property damage to the house or unit that they are responsible for. If you do not require your tenant to carry renters insurance, you may be held liable by someone injured on your property even if your tenant was the negligent party.
Benefits of Landlord Insurance
Financial Protection: Landlord insurance protects your home and any personal property that belongs to you in the rented space if they are damaged in a covered claim, or will pay legal and medical expenses to anyone who may be injured on your rented property as a result of your negligence. Having the right landlord insurance coverage on your rental property will protect one of your most valuable assets and can save you from financial ruin.
Peace of Mind: When you purchase landlord insurance, you can rest easy knowing that you're covered in case of unexpected events.
Potential Discounts: Many insurance companies offer multi-policy discounts if you bundle your landlord insurance with your primary homeowners insurance and auto insurance. In addition, you may qualify for additional discounts that will make your landlord insurance more affordable and attainable.
Protection Against Fines and Penalties: If you have a mortgage on your rental property, your mortgage lender will require that you carry a landlord policy that protects at least their financial interest in the property. Not having enough insurance coverage on the property can lead to fines and penalties from your lender. Of course, even if you don't have a mortgage, landlord insurance is a necessary expense to incur to protect yourself and your assets.
Eligibility Requirements
Anyone who owns a home, condominium, or townhouse that they rent to others is eligible for landlord insurance. You will need to provide the following information to get a landlord insurance quote that suits your budget and provides the protection you need on your policy:
Personal Information: You will need to provide details such as your full name, date of birth, property address, and mailing address. Some insurance companies may ask for your social security number as well.
Claim History: When applying for a new landlord insurance policy, you will need to provide the dates and details of any past claims you may have had on your current landlord insurance policy as well as any claims you may have had on other properties you may own, whether they are rented or not. Your agent or insurance carrier will need the date, description of what happened, and payment amounts for any claim you may have had on any of your owned or rented properties.
Property Information: You will need to provide the details of your rental property such as the year it was built, its square footage, what kind of heat it has, and when things like the roof and the systems that service the rental such as the electrical, heating, cooling, and plumbing systems were last updated. You may be asked for additional information about the rental as well.
Coverage Preferences: If you already have an active landlord insurance policy, you can refer to the current coverage on your policy to get an "apples-to-apples" quote and discuss higher or lower coverage limits based on what you're looking for. Keep in mind that if your rented property is a house, your insurance agent or insurance carrier will run a new replacement cost estimator to get an idea of what the dwelling should be insured for, taking into account the most recent costs of labor and material. This may be higher or lower than the coverage you have on your existing policy. Your will also need to provide the amount of rent you charge to ensure that your policy will cover you for lost rental income. You should have an idea of how much coverage you want or need, the deductible you would be comfortable paying out-of-pocket after a claim, and elect any optional or recommended coverages.
What Determines the Cost of Landlord Insurance?
Landlord insurance cost is determined by many different factors including:
Location
The property owner's credit score
Replacement cost of the home or the interior of the rented unit (i.e. condominium)
Exposure to extreme weather such as floods, earthquakes, tornadoes, or wildfires
Past claims
Updates that have been done to the home or unit
The presence of safeguards such as a home security system or smoke detectors
The types of pets you allow your tenants to have
Available landlord insurance discounts such as a loss-free credit or multi-policy discount
Landlord Insurance FAQ
No, landlord insurance is specifically for homes or units that you own but rent to others. Homeowners insurance applies to a home or unit that you yourself live in.
Landlord insurance covers flooding within your rental from something such as damage from frozen plumbing, but true flood insurance has to be purchased separately. Flood insurance will cover the rented dwelling or unit if it's damaged by an overflowing body of water such as a river or ocean, but landlord insurance policies specifically exclude flooding of this kind.
If you have a covered claim on your rental property and have purchased loss of rental income coverage, your insurance company will pay the amount of rent that you are unable to collect during the time in which the property is not livable while it's being repaired or rebuilt after the claim. Some insurance companies limit this coverage to twelve months while others offer more or less. Be sure that you understand the amount of loss of rental income coverage your policy includes to ensure that you can count on that reimbursement from your insurance company while your property is uninhabitable.
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