Property investors and landlords know they need insurance to protect their investments. However, they may not be aware of all the insurance options offered today. Landlord insurance is one option that people often overlook but shouldn’t. This insurance covers their property and rental income. What should a person know about this coverage?
Why Landlord Insurance is Necessary
The typical homeowner’s insurance policy only covers homes occupied by the owner. The owner is responsible for any bill when something goes wrong in the home or on the property. For example, if a person falls and is hurt, the owner must pay the associated bills. That’s why they need insurance for landlords. This insurance policy will provide protection for the rental property, its occupants, and any guests on the property.
What Coverage Comes with Landlord Insurance?
When a person purchases landlord insurance, they often receive protection from the following perils. Any physical damage caused to the home by an act of nature or criminal activity will be covered under the property damage portion of the policy. This portion of the coverage also covers other buildings on the property and equipment used to maintain it.
Choose a policy with liability coverage. This coverage pays any bills of those who live in the rental property or visit the occupants of the home if they are injured. The coverage also pays any legal bills and settlements associated with the injury. The homeowner will only be responsible for fees beyond the limits of the policy.
When the property is damaged by a covered loss, it may be uninhabitable. The owner must cover the mortgage until the property can be rented again. When the owner has a landlord insurance policy, the insurer reimburses them for any income that is lost while the property is uninhabitable.
What is Not Covered by a Landlord Insurance Policy?
However, landlord insurance does not cover all items. The renter must purchase separate insurance to cover their belongings. If there is a fire, for example, any items lost in the fire that belong to the renter will not be covered by the landlord’s policy. They need a renter’s insurance policy in this situation.
Furthermore, the landlord’s insurance policy will not cover wear and tear on household appliances and systems. The homeowner must still pay for these items. They may also consider purchasing a home warranty, although they must ensure the policy will cover items in a rental home.
How Much Does This Coverage Cost?
Individuals can expect to pay approximately 15 percent more for a landlord policy than they would for a conventional homeowner’s insurance policy. As the renter has no financial interest in the property, they won’t care for it as well as the owner would. This explains the increase in premiums. However, the price varies by location, the age of the home, and more. Work with a licensed insurance agent to find the right policy for the property.
Landlord insurance provides a person with protection in the event something goes wrong with a rental property they own. A landlord can never rely on finding and retaining a tenant who will pay rent in a timely manner and care for the property as if it is their own. The insurance policy protects the landlord’s assets while providing them with peace of mind. They know they are covered if something goes wrong. Learn more about this type of policy today to see if it is right for you.