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What Exactly Does Landlord Insurance Cover?

  • Jan 25, 2024
  • 5 min read
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If you’re a rental property owner, you probably already know how to set aside a percentage of your rental income to cover general maintenance and repairs. But what are you to do if a storm rolls through and causes extensive property damage? Should you use personal savings, a credit card, or a loan to pay for the repairs? 

Luckily, you won’t need to choose these unfavorable options with landlord insurance, as your insurance provider will handle it. And if you’re further wondering, “What does landlord insurance cover?” you’ve come to the right place. 

Continue reading this guide for property owners to find out. 

What Is Landlord Insurance? 

Landlord insurance is a policy for someone who rents out a property they own. This type of home insurance includes property and liability protection for landlords to shield them from potential financial losses. If you have a mortgage on a rental property, your lender will likely require you to have a landlord insurance policy. 

Various types of rental properties are eligible for landlord insurance. So, if you offer seasonal vacation rentals through Airbnb or short-term lease agreements, you can still get a landlord insurance policy. However, in some instances, you may want or need additional insurance coverage. 

For instance, consider a commercial insurance policy for Airbnb rentals and ask your homeowner’s insurance policy provider if you can use this policy when renting out your primary residence. Sometimes, your homeowner’s insurance provider will approve your policy for rentals less than 30 days at your primary dwelling. 

Although landlord insurance is often more expensive than homeowner’s insurance, landlord insurance offers higher levels of protection. Yet, landlord insurance costs vary depending on several factors, such as the types of coverage you purchase and your policy limit. How often you rent your property and how long people stay on average may also affect the price. 

What Does Landlord Insurance Cover? 

A landlord insurance policy will cover many things regarding your rental property. Let’s examine the three most critical financial losses this insurance will cover. 

Property Damage 

A landlord insurance policy helps cover physical property damage from a covered peril, such as: 

  • Fire 
  • Hail storm 
  • Lightning 
  • Wind storm 

While the policy will include the property itself, it may also cover damage to items you leave on-site to maintain the property, such as lawnmowers or snow blowers. 

If your property has detached structures, such as a detached garage, fence, or shed your insurance policy will likely help cover damage to them, too. 

However, always ask about exclusions to property damage when requesting insurance quotes. Often, some types of property damage, like flood damage or water damage, require additional coverage. 

Liability Coverage 

In addition to physical property coverage, landlord insurance covers personal liability claims. This means that if a tenant, guest, or vendor sues you after becoming injured on your property, the landlord’s insurance policy will help cover the following: 

  • Court fees 
  • Legal fees 
  • Medical expenses 
  • Negotiated settlements after paying the deductible 

Instead of purchasing a separate liability insurance policy, you’ll have peace of mind knowing your landlord insurance will cover these fees should a court determine you were at fault for someone’s injury on your property. 

Loss of Income 

Loss of rental income is often a covered loss under a landlord insurance policy, meaning should your property become uninhabitable and tenants need to move out, your policy will usually cover the costs. 

Yet, if you expect your rental property to be uninhabitable for more than 30 days, you should ask your insurance provider for a vacancy permit, which will continue coverage while you repair it. Insurers typically discontinue coverage on a home when it becomes unoccupied for over 30 days. 

If you experience a lap in insurance, your property may experience further damage that you’ll need to pay for out of pocket. After all, vacant properties are more susceptible to damage. This is why the Insurance Information Institute (III) states that a vacant home still needs insurance. 

What Does Landlord Insurance Not Cover? 

Of course, landlord insurance coverage doesn’t include all damages. Let’s look at what landlord insurance typically doesn’t cover so you can buy additional insurance coverage or save money for these unfortunate circumstances. 

Equipment and Appliance Malfunctions 

Landlord insurance usually doesn’t cover the costs to repair the following items: 

  • Air conditioning system 
  • Furnace 
  • Kitchen appliances 
  • Water heater 

Landlords can purchase a rental property home warranty to pay for repairing and replacing these items. 

Shared Property 

Typically, landlord insurance is for non-owner-occupied properties. So, if you rent out an extra room in your home, you may not qualify for landlord insurance. 

In this case, you can ask your homeowner’s insurance provider for additional coverage for the room you are renting. If you rent your primary residence while away, ask your homeowners insurance provider for coverage before exploring landlord insurance options. 

Tenant Belongings 

A landlord insurance policy will never cover the tenant’s personal belongings. 

If tenants want to protect their personal property, they should purchase renter’s insurance. In fact, one of the questions to ask renters when preparing to sign the lease agreement is if they want to buy a renters insurance policy. Rental property insurance explicitly covers personal possessions from damage or theft. 

If your tenant wishes to purchase this coverage, they may be able to do so from the landlord’s insurance provider for a more competitive rate. 

Extra Coverage Landlords Should Consider 

Insurance companies offer various optional coverage options that landlords can add to their policies. 

For instance, although dwelling coverage includes damages from some natural disasters, it doesn’t cover them all. Thus, other types of insurance to consider are earthquake and flood insurance. 

Further, the following are more examples of coverage options you can add to your landlord insurance policy: 

  • Building codes 
  • Burglary 
  • HVAC 
  • Vacancy or property under construction 
  • Vandalism 

There are dozens of ways to customize your policy to get the necessary coverage. Insurance companies provide numerous services and packages to landlords because of the varying circumstances they face when renting properties. 

Work With Property Managers Who Understand Your Needs 

So, what does landlord insurance cover? Now you know that it covers property damage, liabilities, and loss of rent. However, it’s best to add optional policies to your plan for maximum coverage because it doesn’t cover everything. 

Once you have insurance, the next step is to hire a property manager to help you find tenants and maintain your property. Find a property manager with All County today to learn how our team can help. We have offices across the U.S. with highly qualified managers! 

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