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What Is Landlord Insurance?

Landlord insurance is a policy that provides home insurance for rental properties you own, rent out to others and do not live in. It’s also called rental property insurance and investment property insurance, so don’t be confused if you hear those terms used interchangeably.

Whether you own and rent out a single-family home, multi-unit apartment building or something in between, landlord insurance can help protect the structure of your home, the property it sits on, your financial wellbeing if you were to be sued due to a covered peril, and even loss of income if a covered peril forces your tenants to move out unexpectedly.

If your home qualifies as a rental property, landlord insurance is there to help protect you and your financial wellbeing from any covered losses that occur. Plus, it acts as some solid peace of mind knowing you’re protected.

What Does Landlord Insurance Cover?

Property

☘ If your rental home or other structures on the property are damaged or destroyed by a covered peril, landlord insurance covers them up to your policy’s maximum, which should be at least the current value of the unit. This coverage also applies to any belongings you keep on the property that are used for maintenance, such as lawnmowers and tools.

Personal

☘ If a covered loss occurs, such as a hurricane damaging the home, landlord insurance can help pay to repair or rebuild your rental unit entirely. And if the tenant must temporarily move out, it could provide lost rent payments during the vacancy. Also, if a tenant gets severely injured by an event that could’ve been avoided and you’re found liable, it could help pay for medical bills and legal expenses.

Additional

☘ If you plan on putting some serious remodeling and renovation into the works in between tenants, you can add additional coverage for when the property is under construction. This helps with any lost rent payments and can actually help to reimburse you if you run into code compliance issues and need to bring any part of the home up to standard code.

Different Tenant Types for Landlord Insurance

Long-Term

☘ Lease agreement of six months or longer

Short-Term

☘ Lease agreements shorter than six months

Homesharing

☘ No lease agreement and renting on Airbnb, etc.

Does Landlord Insurance Cover Tenant Damage?

This is a complicated answer to a tricky question. If a tenant throws a house party and damages the walls, floors and other appliances in the home, the tenant damage is typically not covered by your landlord insurance policy. But if the tenant accidentally starts a fire and causes significant damage, that tenant damage would typically be covered by landlord insurance.

With any insurance policy, coverage can be restricted to a case-by-case basis. Generally speaking, if negligence is the main reason for the accidental damage, there may be a good chance the damage won’t be covered.

What Else Isn’t Covered by Landlord Insurance?

Maintenance

☘ General upkeep of the property, which includes replacing carpets, worn-out appliances, repainting the home and other general wear-and-tear related issues aren’t covered.

Tenants

☘ Your tenants’ belongings and financial wellbeing are not covered by your landlord insurance policy. They should invest in their own renters insurance policy to get covered.

Owner-Occupied

☘ If you live in the rental home full time and are just renting out a room, a few rooms, the garage or another room, you’ll need homeowners insurance instead of landlord coverage.

How Much Is Landlord Insurance?

The average cost of landlord insurance in the United States is about $1,000 per year, which is nearly 15 percent higher than the average homeowners insurance cost. One of the main reasons for the increase is because landlords rely on tenants to keep their properties safe and sound. Since tenants don’t have vested interest in the home, they typically don’t care for them as a homeowner would.

Like any insurance policy, the average cost of landlord insurance depends on a multitude of factors, including the type of home you rent out, the state in which you rent it and the coverage amounts you maintain on the property.

Do I Need Landlord Insurance?

If you maintain a mortgage on your home, you’ll be required by your lender to maintain adequate landlord insurance while you still owe payments on the property. However, if you own the home outright, you’re not legally required to have landlord insurance. Although it’s always a good idea to make sure your rental properties are properly insured

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