When it comes to protecting residential properties, it’s important to understand the distinction between landlord insurance and homeowners insurance. Whether you plan on having full-time residents or only part-time tenants, understanding the disparities between landlord and homeowners insurance allows you to ensure comprehensive protection and minimize potential vulnerabilities. In this article, we’ve outlined what landlord insurance covers, how this compares to home insurance, and extra insurance coverage options for you to review as a property owner or landlord.
What does landlord insurance cover?
Landlord insurance provides coverage for property owners who rent out one or more residential or commercial properties. The policy typically includes protection for various aspects related to the rental property and the potential risks associated with being a landlord. Here's an overview of what landlord insurance typically covers:
Property Damage: Coverage for the physical structure of the rental property in the event of damage caused by covered perils such as fire, lightning, wind, hail, and other specified hazards.
Liability Protection: Protection against legal and medical expenses if a tenant or visitor is injured on the rental property and the landlord is found liable. This can also include legal defense costs.
Loss of Rental Income: Reimbursement for lost rental income if the property becomes uninhabitable due to a covered loss, such as fire or water damage.
Personal Property: Coverage for landlord-owned items on the property, such as appliances, furniture, and maintenance equipment stored on-site.
Additional Structures: Protection for other structures on the property, such as garages, sheds, or fences.
What does landlord insurance not cover?
Landlord insurance typically provides coverage for a range of risks associated with renting out a property, but there are certain situations and types of damage that it may not cover. Here are some common exclusions from landlord insurance policies:
Unoccupied Property: If the property remains unoccupied for an extended period, typically 30-60 days, some landlord insurance policies may not cover certain types of damage, such as vandalism or water damage.
Wear and Tear: Normal wear and tear on the property, such as aging of the roof, paint, or carpet, is generally not covered by landlord insurance. Landlords are responsible for maintaining the property in good condition.
Intentional Damage by the Tenant: Damage caused intentionally by the tenant is usually not covered. This includes vandalism or destruction of the property by the tenant.
Tenant's Personal Belongings: Landlord insurance does not cover the personal belongings of the tenant. Tenants need their own renters insurance to protect their personal property.
Loss of Rental Income Due to Vacancy: If the property becomes vacant and no rental income is generated, most landlord insurance policies do not cover the loss of rental income during the vacancy period.
Certain Natural Disasters: Some natural disasters, such as earthquakes and floods, are typically not covered by standard landlord insurance policies. Separate insurance policies are available for these specific risks.
Difference Between Landlord Insurance and Homeowners Insurance
Both homeowners insurance and landlord insurance offer coverage for the structure of the property, but the key differences are personal property coverage and liability coverage. Liability coverage included in homeowners insurance provides coverage for every member of a household, whether the accident happens in the home or somewhere else. The liability coverage portion of landlord insurance only provides coverage relating to the rented premises.
Extra Insurance Coverage for Landlords to Consider
As a landlord, you have the option to enhance your insurance coverage through various add-ons and endorsements. Here’s an overview of the home insurance coverage types that you may want to consider adding to your landlord insurance policy:
Vandalism Coverage: If your property is damaged by vandalism, it typically isn’t covered by landlord insurance.
Burglary Coverage: Your landlord insurance policy should provide coverage for your property if it’s damaged during a break-in; however, it typically won’t help replace stolen items.
Rental Property Under Construction: If you’re renovating your rental property, you may consider getting additional coverage to help protect the structure until it’s ready for tenants.
Building Codes Coverage: If you’re repairing your rental property after it’s been damaged, you may be required to update items such as ventilation or wiring if the city or county codes have changed since your property was originally built. This coverage can help pay for those additional costs.
Ensure Your Tenants are Protected with Renters Insurance
Since landlord insurance only protects the structure of the property, renters insurance—also known as tenant insurance—is a type of home insurance coverage that helps protect the tenant and their belongings. The typical renters insurance policy has three types of coverage:
Personal property: Renters insurance provides coverage for personal belongings, such as furniture, clothing, electronics, and jewelry, in the event of theft, vandalism, fire, or other covered perils.
Liability: Renters insurance includes personal liability coverage, which protects the policyholder in case they are held legally responsible for bodily injury or property damage to others. It may also cover medical payments if a guest is injured while on the rental property, regardless of who is at fault.
Additional living expenses: If the rental property becomes uninhabitable due to a covered loss, renters insurance can cover the additional living expenses, such as hotel bills or temporary rental costs, until the property is repaired.
SelectQuote Can Help Landlords Find the Right Insurance Policy
At SelectQuote, we can help you navigate the complexities of buying insurance coverage as a landlord. We can answer any questions you have, explain the details of your coverage options and help you find the right insurance coverage at the right price for you. In just minutes, our licensed insurance agents can compare quotes from several of the nation’s most highly trusted carriers—all in one place.
