Landlord Insurance 101
Being a landlord can be a profitable business, but it comes with a certain amount of risk. Tenants could damage your property, or worse, someone could get injured on your property and you could be held liable. Landlord insurance, also referred to as a dwelling policy, can help protect you from these financial dangers.
What is covered by landlord insurance?
If you own property that you use as a long term rental, you need a landlord insurance policy. In fact, if you don’t live in your property full time there is a good chance you won’t be covered by standard homeowners insurance, which means you will absolutely need a landlord policy to protect your property.
Landlord insurance is broken down into three parts:
- Dwelling/physical property: The policy covers the physical structure of the home and other structures on the property against covered perils.
- Personal property: By default, landlord policies don't offer much personal property coverage, because you will likely not have many of your own belongings in the home. However, if you rent the home out as an Airbnb, or fully furnish the home, your agent can increase this coverage.
- Legal/medical fees: If someone gets hurt on your rental property a landlord policy provides liability protection in case it results in a legal battle.
Does a landlord policy protect owners of short term rentals?
If you are renting out your property long term to the same tenant, a landlord policy would be necessary to protect your property. But what if you rent out your home as an Airbnb?
Short term rentals for vacation houses can be covered under dwelling policies, but it is also possible to purchase vacation rental, B&B coverage, or a hotel policy for your rental unit, depending on the situation. If you plan to rent out your home for short term rentals you can work with one of our experts at Goosehead Insurance to make sure you have the right coverage to protect your property.
What is the difference between landlord insurance and homeowners insurance?
Homeowners insurance covers the physical structure of your home, your personal property, and provides liability coverage in case someone is hurt on your property. It is available to owners who are using the property as their primary residence. Many homeowners insurance policies exclude coverage for rental exposure because of the increased risk.
It is possible that your homeowners insurance company won’t have a problem if you rent out a room in your home occasionally, but some insurance companies may require that you purchase additional coverage if you have renters on the property for short periods of time, so it is important to check with your insurer before bringing in a renter.
Landlord insurance policies are specifically designed for residences that are not occupied by the owner. Homeowners insurance typically excludes coverage for rental properties, so you will need landlord insurance to protect your property in the event of a covered peril. Because bringing in a renter increases the risk associated with your property, landlord insurance is about 25% more expensive than traditional homeowners insurance.
Does landlord insurance protect your tenant or their property?
Landlord insurance typically only protects the house or apartment building itself, not the property inside. This is why renters insurance is so important — in the event of a disaster, a landlord policy only protects their home, not their tenant’s belongings. Renters insurance is very affordable, making it easy for tenants to protect their property.
How much does landlord insurance cost?
The cost of landlord insurance will vary significantly based on a number of factors, including the value of the property, the amount of coverage you choose, and your location. Landlord insurance is generally more expensive than a standard homeowners insurance policy, but the only way to know exactly what it would cost to purchase a landlord policy is to get a quote from one of our experts at Goosehead Insurance.
Is it worth getting landlord insurance?
Landlord insurance is a necessity if you are renting out your property, not only because it protects you from financial devastation due to a covered peril, but because if you have a mortgage on the property your lender will require you to carry insurance as a condition of your loan.
That doesn’t mean landlord insurance covers everything, however. There are a number of things that aren’t covered by a landlord insurance policy, including:
- Tenant’s property: Landlord insurance protects the home and personal property left for the care of the rental, but not your tenant’s property.
- Maintenance: Maintenance issues and general wear and tear aren’t covered by a landlord policy. As the property owner, general home maintenance is considered your responsibility.
- Pest infestations: Almost every insurance policy, including homeowners, renters, condo insurance, and many others exclude damage caused by pests and vermin.
- Shared property: If you rent out a spare room, you may be ineligible for landlord insurance since the owner is occupying the property.
- Flooding and earthquakes: Most insurance policies exclude damage caused by floods and earthquakes, but you can purchase separate flood insurance or earthquake insurance policies to cover your property.
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