Becoming a Landlord: Why You Need Landlord Insurance

Posted on Dec 11 2017 - 10:37pm by Admin

Landlord handing a key to new tenantIf you are considering renting out your property, you also must consider having landlord insurance. While homeowners insurance would cover your home in case of fire, your belongings if there’s theft, and your legal and medical fees if someone gets injured in your home, it doesn’t offer any protection if you rent out your property.

Potential Risks of Renting Out Your Property

In general, homeowners insurance only covers single-family homes that are occupied by the owners so if you’ll be renting out your property, it won’t be covered. While plenty of policies would cover short-term rentals, if you were vacationing for a few months, for example, it won’t cover a summer cabin you’re renting out to different people because of the higher risk that would fall on your insurance provider.

The risks are likewise higher if you rent out your property fulltime because you have increase liability for people that get hurt on your property, including your tenant and their guests, warns United States Adjusters, an experienced public claims adjuster. 

Insurance companies likewise receive more claims on rental properties since tenants don’t usually care for the rental property as well as their owners would. They’d also be less likely to pinpoint and report maintenance tasks.

Researching Landlord Insurance Options

If you’re satisfied with your current homeowner's insurance provider, ask if they offer landlord insurance, also sometimes called the special perils or dwelling fire policy. Although landlord insurance isn’t as comprehensive as your homeowner's insurance coverage, it would protect your rental property from theft, fire, ice, and wind damage. 

Dwelling fire policies come in several levels and the higher the level, the more comprehensive the coverage. For instance, the highest policy level might offer replacement costs for your property and valuables should you experience a break-in.

Landlord insurance usually covers your property and structures on it like a shed, your possessions, some liability coverage, and lost rental income if your property becomes uninhabitable or damaged. If your policy doesn’t cover lost rental income, ask if you could tack it onto your existing coverage for an extra fee. 

You should likewise consider getting an umbrella policy for additional liability protection. Policies significantly differ, however, so make sure to read and understand the fine print before signing to ensure that you’re covered for everything.