One of the most common questions we hear from rental property owners is: do landlords have to have insurance? The answer is, yes. As a landlord, you need insurance to cover your investment in case of a fire, flood, or major catastrophe. More importantly, you need to protect yourself against liability. Talk to your insurance agent or your property manager about what you need in a good landlord policy. Today, we’re covering some of the basics.
Landlord insurance is different from homeowner’s insurance. If you are renting out a property that you once lived in, make sure you switch policies. Your homeowner’s insurance will not cover you when you’re not living in the property. The major difference in a landlord policy is that you’ll have extra liability coverage, and your tenant’s belongings won’t be covered by your policy. Your insurance will cover the building, the potential loss of rent, and any liability.
Structural Coverage and Loss of Rent
Your landlord policy should cover the physical structure of your home. If it burns down or becomes a total loss, you’ll need an insurance policy that can cover the cost of rebuilding. Make sure your policy includes protection against perils such as earthquakes, wind, fire, and flood. In some cases, your policy will cover everything except for specific exclusions. In other cases, you’ll need to buy extra coverage for certain perils. Talk to your agent.
A good landlord insurance policy will include coverage against loss of rent. If your property suffers a loss that prevents your tenants from living there, such as a fire, you will receive reimbursement for the rent that isn’t coming in.
If a tenant or a guest of your tenant gets injured on your property, you may be legally responsible. It’s important that your insurance covers you against any potential lawsuit or damages that other parties can claim.
If you’re asking – what does landlord insurance cover you for – you should know to look for a policy that covers your home’s structure and systems, the potential loss of rent, and your own personal liability. It’s also a good idea for your tenants to carry their own renter’s insurance policy.