Landlord Insurance Coverage

Landlord insurance protects a property owner in the event of damage to a unit or single family home that is rented for income. Its different from homeowners’ insurance, so landlords will need to research to make sure the policy offers the needed coverage for their property. A good landlord insurance policy could safeguard against financial ruin while preserving your investment portfolio.

Landlord insurance provides base coverage in the following areas:

• Property damage
• Injuries sustained by a tenant or guest
• Weather protection

Landlord insurance does not cover property belonging to the tenant, so renters must purchase their own form of renters’ insurance to ensure adequate protection for their needs. Landlords can mandate renters’ insurance in a lease policy. Renters can find their own renters insurance on the private market.

Landlord insurance protects investment properties in case of damage due to fire, theft, or natural disaster. This type of landlord insurance is a baseline policy known as DP-1. The next step up, a DP-2 policy, generally covers more disasters including vandalism or wind damage, but this varies based on the insurance policy. A DP-3 is the most effective policy, covering a property in full unless otherwise stated. This type of insurance does not cover the cash value of the loss but, rather, the actual replacement cost. This is the kind of coverage that most insurers recommend. There are low-cost insurance plans out there, but be sure you think in terms of quality when it comes to choosing your plan.

Added Benefits

Landlord insurance offers a variety of additional benefits as well. Landlords can insure any belongings contained within the property. For example, furniture inside the building can be covered under a policy. Top-tier benefits could also cover any lost income derived from a catastrophic incident. The loss of income must stem from a disastrous incident that causes a loss of the income stream. Insurance companies would not cover losses if the investment property is simply unoccupied or vacated by the tenant.

Short-Term Rentals

Landlord insurance should be purchased if you plan to rent out a property for the long-term; six months or longer. Landlord insurance should also be obtained if you have a second home that you rent out. Renting out a property or unit on a short-term basis requires a business policy because you would fall under the category of a hotel or motel. Landlord policies do not cover business activity within a particular dwelling. The type of short-term insurance offered depends on the insurance company, but you should notify an insurance company if you plan short-term rentals.

Is Landlord Insurance Right for Me?

To find out more about landlord insurance or homeowners’ insurance, contact Cost-U-Less at 800-391-4071. Cost-U-Less offers competitive insurance rates and will help you find low-cost insurance plans that provide solid coverage while staying within your budget.