Does Landlord Insurance Cover Tenant Damage?

Landlord insurance covers some forms of tenant damage and excludes coverage for other forms of tenant damage, and the lines between the two can get kind of murky at times. There are three types of landlord policies (DP-1, DP-2 and DP-3) that cover a variance of perils and incidents.

Generally speaking, landlords should be covered for accidental damage to the property caused by the tenant, but they won’t be covered for general wear and tear. Furthermore, requiring your tenants to maintain renters insurance while they live in your home could save you a lot of hassle and prevent you from having to file a claim against your landlord policy.

Since landlord insurance is designed for those property owners not living in the home, establishing what is and isn’t covered can be tricky. Luckily, we’ll break down everything you need to know.

Landlord insurance is separated into three categories: DP-1, DP-2 and DP-3. A DP-1 provides you with the least amount of coverage, a DP-2 offers mid-range coverage and a DP-3 is highly recommended because it provides the most coverage for your property, belongings and financial wellbeing.

All three policies can provide some form of protection for your dwelling (which is the structure of your house or interior of your condo), additional structures on the property if it’s a house, select personal belongings you leave on the property, liability coverage for lawsuits and injuries and even loss of rental income if a covered peril forces your tenant to move out.

The easiest portion of your policy to understand is the dwelling coverage. This portion simply provides coverage for your house, which includes things like the roof, windows and flooring, if it is damaged by a covered peril. If you own a condo, you’ll typically have coverage for the walls-in since you don’t own the common areas.

So if a covered peril fire ravages a portion of your rental house or condo, damaging the kitchen and a part of the living room, landlord insurance will pay to repair them back to normal. This coverage will kick in for any covered peril, like a lightning storm or hurricane, as well.

But you should know that DP-1 policies may only cover fires, DP-2 policies will only cover those perils named in the policy and DP-3 has the most expansive coverage as an open-perils policy.

If you own and rent out a condo, you can skip this section because it doesn’t apply to you. But if you own and rent out a house, additional structures coverage could protect you from damage to other structures on your property. These structures can be a detached garage, shed or carport. Again, the peril must be covered by your policy.

This is where the line gets a bit murky. Personal property coverage typically protects items you leave on the rental property that help maintain it. These items could be lawnmowers, garden tools and generators. But your coverage can also extend to somewhat necessary things, like an oven, dishwasher and washer and dryer machines.

This coverage doesn’t extend to any of your tenants’ belongings, which is another reason you may want to require them to get renters insurance. If you rent out a furnished or partly furnished unit, you may want to check with your provider to see if your belongings are covered.

It’s also worth noting that DP-1s are actual cash value policies, which takes depreciation into account when reimbursing you, while DP-2 and DP-3 policies are replacement cost coverage, which reimburses you the full value of what you paid for an item.

If your tenant or their friend gets injured on your property and you’re found liable — maybe due to a faulty stair or rusty nail — personal liability protection within a landlord insurance policy can help pay for their medical bills. If they sue you, it can also help cover legal fees up to your policy’s maximum.

But this coverage extends beyond just injuries. If you’re found negligent for a plumbing mishap, fire hazard or something else that destroys your tenants’ belongings, it can pay to replace or repair those items as well.

If a devastating peril were to destroy your rental property, necessitating a complete rebuild or repairs that kept tenants from living in it, loss of rental income would likely be your second best friend behind dwelling coverage. Loss of rental income would pay you the equivalent you’d be getting in rent money while the home is being repaired or rebuilt.

That way, you wouldn’t be paying a mortgage or out of your own pocket on a property that can’t be rented to anyone.

Damage to your home, other structures on the property and your belongings kept on the premises is covered by landlord insurance if it was damaged by a sudden and accidental peril, such as a fire, hurricane or lightning. Even if that fire was accidentally started by your tenant, your landlord policy should provide coverage.

But damage typically falls into one of three categories: accidental, intentional and wear and tear. While accidental damage is usually covered and wear and tear is never covered, intentional damage can be covered in certain scenarios. Let’s take a look at some examples.

Accidental damage is often covered by landlord insurance, but it also depends on your policy. A DP-3 is the most comprehensive policy and covers much more, while a DP-1 can sometimes only cover fire-related claims and a DP-2 can fall somewhere in the middle.

So let’s say your tenant is deep frying a home-cooked meal in the kitchen when the grease splatters on the wall, causing a kitchen fire that damages the walls and the stove and dishwasher, which you provided.

The dwelling portion should take care of the repairs to the kitchen, while the personal property portion should replace the stove and dishwasher. If the repairs cause your tenant to temporarily move out, loss of rental income can even step in to reimburse you for the money they would’ve paid for rent.

Intentional damage can be a brainbuster at times. While it’s typically not covered, there are certain scenarios when your insurance provider could step in to pick up the bill. If your tenant or their friends destroy your home intentionally during a wild party and they don’t have renters insurance, that damage could qualify as vandalism.

While property damage by the tenants can look like vandalism in some cases, it’s better to consult your insurer before you file a claim. But if the damage is minimal, you may be better off keeping the security deposit and moving on with your life.

Wear and tear is never covered by landlord insurance. General wear and tear could be anything from the flooring wearing out to plumbing pipes rusting and springing a leak. The best way to prevent general wear and tear from becoming an extremely expensive fix is to conduct regular maintenance inspections on your rental property.

The best way to be protected from tenant damage — and beyond — is to get a landlord insurance policy. Clovered is licensed in more than 18 states and has made the process to get a policy extremely easy. Simply enter your rental property’s address in our online quoting platform and we’ll pair you with a policy in minutes!