Landlord Insurance in a Nutshell: 10 Essential Points to Remember

By Rylie Holt

Millions of individuals serve as landlords in the United States today. Many of these individuals now discover they aren’t as protected as they believed thanks to the coronavirus. For example, certain areas stopped all evictions in response to the pandemic, and landlords must scramble to cover mortgages when their renters fail to pay. Anyone who has yet to obtain landlord insurance should consider investing in this financial product to know they are covered regardless of what comes up in the future. The following are some important points to remember regarding this type of protection.

What is Landlord Insurance?

Landlord insurance provides coverage in the event the property sustains damage, someone suffers an injury while on the property, or the home becomes unlivable due to a catastrophic event. Many landlords believe they are covered under their standard homeowner’s insurance policy, but this is not the case. The standard policy only provides limited protection for rentals, which is why additional coverage should be purchased. Learn more online at rogerbutlerinsurance.com.

Property Damage

Property damage is typically covered by a landlord insurance policy. The policy pays out if the home is physically damaged due to weather, fire, or criminal activity. For example, a roof damaged during a hail storm will usually be repaired or replaced under the policy. This coverage also protects the landlord in the event another building on the property sustains damage, and the same holds true of equipment stored on the property for the purpose of maintaining it. This includes snowblowers and lawnmowers along with other equipment.

Liability Claims

Liability claims are also covered under this type of policy. Individuals hurt while residing on the property or visiting may file a claim against the property owner. If this happens, the insurer helps cover the cost of any medical bills associated with the injury, legal fees relating to the accident, and settlements that may result from a legal case. This also won’t be covered by the standard homeowner insurance policy, so the extra policy is needed.

Loss of Income

Loss of income tends to be covered under a landlord insurance policy. When the rental property is deemed unlivable due to a covered loss, such as a tornado or fire, the landlord receives reimbursement for any rental income lost while the home is being repaired or rebuilt. However, this portion of the policy only covers damage to the structure in the event it becomes unlivable. Additional coverage is needed if a renter refuses to pay rent, and a rider needs to be obtained to secure that type of coverage.

Rent Guarantee Coverage

Rent guarantee protection ensures the landlord gets paid in the event a renter refuses to pay as agreed. This has become an issue during the pandemic for many landlords. Their tenants are no longer employed and employment benefits have yet to be paid. As a result, the tenant isn’t able to meet their obligations and rent payments are falling behind. The landlord will be covered in this situation and receive the funds needed to pay the mortgage on the property or other bills.

Renters’ Insurance

Tenant’s belongings aren’t protected under a landlord insurance policy. The renter remains responsible for obtaining coverage for these items. Tenants need to secure renters’ insurance to cover their belongings in the event of a disaster, theft, or another catastrophe. Be sure to include a clause in the rental agreement requiring the purchase of this policy by renters for your own protection. If they do try to sue because their possessions were damaged, this clause helps to protect the landlord.

Landlord Contents Insurance

Landlord contents insurance is similar to renters insurance but covers any belongings of the landlord in the rental. This includes a dishwasher that breaks or a furnace that goes out while the property is being rented. However, landlords need to sit down with a licensed insurance agent to find out exactly what this portion of the policy covers and what is excluded.

Reducing the Cost of Insurance

There are ways to minimize the cost of landlord insurance. Bundle policies when possible, and ask for discounts. For instance, some landlords find they are eligible for a discount because they served in the military. These discounts help to keep the cost of coverage down. Others benefit from comparing quotes with different insurers to find the best price. However, be sure to compare the policies carefully to ensure you know what you are getting. Finally, ask about discounts for installing safety features in the property, such as deadbolts and surveillance cameras. Many insurers offer a lower price when these items are installed because they know their risk is reduced thanks to the presence of their installation on the property.

Legal Assistance Coverage

Legal assistance coverage is something every property owner should consider investing in. Issues may arise unrelated to liability suits and the landlord will be responsible for any legal costs associated with these actions. Securing a policy to cover expenses incurred as a result of these issues provides an extra layer of protection for the owner. Legal fees quickly add up and eat into the owner’s profits. This coverage ensures that this is not the case.

Paying for the Coverage

Landlords may include the cost of any coverage in the rent. Obviously, the amount of rent that may be charged for a residence is based in part on where the property is located and what type of property it is. However, some renters are happy to pay slightly more to rent a property with landlord insurance. They know they are protected if something goes wrong. For example, if a person is injured while living on the property, they know the bills will be paid even if the landlord doesn’t have the funds to cover them. The insurance company steps in and handles payment, so the tenant can move forward with life without concerns about mounting expenses being incurred through no fault of their own.

Landlord insurance protects a property owner and their investment in a rental. Owning a rental property comes with a great deal of responsibility, and landlords need all the help they can get. This type of policy is of great benefit when something goes wrong, as the landlord won’t need to use any profits from the rental to rectify the situation. The peace of mind obtained from knowing this is priceless.

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