In the same way that homeowners are required to buy homeowner’s insurance, it’s important that landlords have a landlord insurance policy in place when they’re renting out a home to tenants. Most people don’t realize that nearly 30 percent of residential homes are rental properties. Those properties need a comprehensive insurance policy that covers losses due to fires, break-ins, and severe weather incidents that leave a home uninhabitable for reasons beyond your control.
Homeowner’s Policies versus Landlord Policies
Like homeowner’s insurance, landlord insurance provides coverage for the home itself and other structures on the premises. While both types of insurance are similar, there are a few key differences. For example, homeowner’s insurance policies typically cover the personal property of an owner who lives there, such as furniture, clothing, and computers. However, a landlord insurance policy only covers the structure and its systems.
Since landlord insurance does not cover personal property owned by tenants, we always recommend that tenants carry renter’s insurance. You can require that your tenants buy a renter’s insurance policy, which will not only protect their personal belongings, but also take care of any liability that falls to them when the property is damaged or a guest is injured.
If you’re renting out a property that you once lived in yourself, make sure you convert from a homeowner’s policy to a landlord policy. If you don’t, it’s possible a claim might get denied. Talk to your insurance agent to make sure all of your new requirements as a landlord are met.
Liability and Landlord Insurance
An important part of your insurance policy is your liability protection. If a stairway falls to pieces and a tenant is injured or your tenant’s dog bites a child who lives next door, you may face a lawsuit. When you are sued or a claim is filed against you, the insurance company will defend you against any liability. They’ll also pay any damages that are awarded to the complaining party.
Make sure your policy anticipates all of the potential liability and risk that comes with renting out a property. You cannot be too careful. If you’re working with a property management company, you’ll have an extra layer of coverage. You should also include your property manager as an additional insured so that a unified defense can be in place in the event that there is a lawsuit or a claim against you.
Additional Landlord Insurance Inclusions
