Landlord insurance is designed to protect the investment owners make in properties they intend to rent out or lease to others.
It works in the same respect as many homeowner insurance policies by offering protection for the structure of the home from specifically named events. Yet, landlords insurance policies are different in that they do not provide protection for the possessions of the tenants who rent the home or building.
Additional protections offered by the standard landlord insurance policy include:
- Tools and other property used to serve the rental (equipment, lawnmowers, snow blowers, etc.) if selected.
- Other structures on the property (detached garages, storage sheds, etc.) if selected.
- Premises Liability coverage
- Loss of rental income (protection for your rental income if you are unable to lease the property while repairs are underway) for a covered loss.
Before buying landlord insurance for yourself, it is important to learn a few key details and factors to consider. Below summarizes what you need to know about landlord property insurance and more.
Do You Need a Landlord Insurance Policy?
If you own one or more properties you currently rent to others or have plans to rent to others; then you need to purchase a landlord insurance policy. A landlord policy will protect your financial interests in the building and also provide protection for a landlord’s premises liability exposure.
However, there are other types of protection landlords need for their rental properties that may or may not be covered by the most basic policies for landlord insurance. The better you understand the types of coverage available, the more effectively you can compare policy offerings to determine the best protection for you.
What Does Landlord Insurance Cover?
Different insurance companies offer varying degrees of protection in their landlord insurance policies. It is important to make apples to apples comparisons based on the coverage you’re getting and the overall costs of the policies. In addition to standard protection for the value of the home’s structure, additional structures, liability, and personal property, you might also look for some following types of coverage as well.
- Vandalism Protection. Repairs or replaces damage related to vandalism.
- Building Code Protection / Ordinance or Law Protection. Provides protection for bringing the home up to current code if it is sufficiently damaged to require updating according to local statutes.
- Theft Insurance. Provides protection for the tools and other property stored onsite that has been stolen.
- Equipment Breakdown Endorsement. Reimburses payments you make to tenants related to the breakdown of heating or cooling equipment.
- Non-Occupied Dwelling Endorsement. Provides coverage for properties that are unoccupied for more than 30 days — something traditional insurance does not provide.
- Multi-Unit Protection (if applicable). Provides protection for multiple units to landlords who have numerous properties. If all properties are listed on the policy.
These types of protection are not generally covered by a standard landlord insurance policy and require additional protection or “rider” policies to receive this unique protection.
What Doesn’t Landlord Insurance Cover?
It is equally important to understand the limitations of landlord insurance and to make sure your tenants understand the limitations of the protection provided. Among the things not protected, or explicitly excluded in most landlord insurance policies, are:
- Rental Property Under Construction. Provides additional protection of the structure until it is ready for occupation. Coverage for this can be provided by a Builders Risk policy.
- Shared property. This refers to situations in which landlords live on the property and share it with others by renting out one floor or a room on their home. Landlord policies are limited to non-owner-occupied properties for the most part. Work with your insurer to find the right protection to meet your specific needs, if this applies to you.
- Belongings and possessions of your tenants. It is important that your tenants understand that your insurance does not protect their possessions, and they should consider renter’s insurance to protect their belongings from covered perils, floods, earthquakes, and more.
- Floods, earthquakes, and sewer backups. Fortunately, there is specific insurance protection you can purchase for these things, but it is not generally covered by your landlord policy.
- Tenant Discrimination Liability helps to protect your business and personal assets from the costs involved in defending yourself against discrimination claims and the expenses of judgments awarded against you
The key is to work with an independent insurance agency, like Insurance Center of North Jersey that has your best interests at heart and will help you get the right kind of landlord insurance.
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