If you own a rental property, it’s important to purchase landlord insurance to financially protect yourself from damage. Before you choose an insurance policy, though, you should have a thorough understanding of what the insurance is and what it covers.
What is landlord insurance?
Landlord insurance provides coverage for property owners who rent out homes, condos, or apartments. It protects from financial loss that results from occurrences like fire, severe weather, or break-ins. In addition to covering the home or dwelling, the insurance also usually covers other structures like sheds, fences, and garages.
What does landlord insurance cover?
The specific coverage depends on the insurance company and the policy. However, most insurance policies cover property damage to the buildings and to personal property. This typically includes damage from fires, storms, vandalism, and theft. Most policies also cover tenant damage.
This insurance also includes liability coverage, which protects the Landlord against liability claims or lawsuits. If a tenant or visitor is injured on the property, it could create a legal issue. The insurance covers expenses that result from a bodily injury claim, including medical payments, legal fees, settlement costs, and funeral costs. It also provides coverage if you’re found responsible for damaging a tenant’s property.
Many insurance policies include loss of income coverage. If the property is inhabitable because of damage from a fire, storm, or other occurrences, the insurance policy gives you the income you would have made if you were renting it out.
There are several other types of coverage that aren’t always included but can be beneficial. Coverage for construction financially protects the landlord from damage while he or she renovates the property. You can also get building codes coverage. If you renovate or repair your property after damage, you may be required to upgrade parts of the property to meet the building codes. In this case, the insurance would reimburse you for these costs.
How is landlord insurance different from homeowner’s insurance?
Landlord insurance has similar coverage for damage, but it’s specifically intended for properties that are being rented out full-time. If you rent out a room or space in your home, you’ll probably just need homeowner’s insurance.
Homeowner’s insurance doesn’t always include liability coverage, while landlord insurance does. Homeowner’s insurance also doesn’t cover lost income. If you’re renting out a property, landlord insurance is an important investment.