What Is Landlord Insurance? And Is Insurance Worth It?

house for rent

Being a landlord can be very hectic, if you are renting out your vacant properties, there are plenty of things that can go wrong when you allow tenants to rent the house. It is wise to take the necessary precautions before it happens.

If you haven’t got the right insurance cover you might have to pay the bills from your own pocket if things go wrong. What if the property is damaged by a natural calamity, or even vandalized? To make being a landlord less stressful than it already is, there is the Landlord insurance, which can really come in handy.

What exactly is Landlord insurance?

Landlord insurance protects you (the landlord) from the risks that accompany your property when you give it on rent. It provides financial cover if your rental house is damaged or becomes uninhabitable after a calamity, or even if one gets hurt on the property.

Many assume that their Homeowners Insurance is going to cover the cost of damage from a natural disaster or accident. But this is wrong, standard homeowners insurance covers only owner-occupied homes. This is the reason landlord insurance is very important when giving property on rent.

Do you really need Landlord Insurance?

Being a landlord requires you to be aware of the benefits of your actions, so one might ask why should they get landlord insurance? Sure, many people plan to get the insurances that will help life after retirement, but when it comes to rental property, you would not want to get into problems either.

You have an empty house, renting it out seems the best choice to make money. Finding quality tenants is easier than you think, but the main issue is to not be worried about the damage and the bills of your property. If your property is damaged you might have to pay for all the repairs from your own wallet. This is the most essential benefit of landlord insurance, if you get the claim, your coverage will pay for the damage and you can relax in your house.

Some Landlord Insurance covers also cover Rent Default and theft, where if your tenant didn’t pay rent, or stole from your property, your claim can pay you for that.

What does a Landlord Insurance cover?

Insurances can confuse a lot of people. Landlord insurance is not that complicated, but still, it might get people thinking, What is landlord insurance? What does it cover? Will I get my money? So, having a list of the types of coverage can help a lot.

  • Property Damage: This is the financial protection in the event where the property suffers a natural disaster, electric malfunction, fire, earthquake, vandalism, or damage by tenants. This will help you get the actual value of the goods that were damaged.
  • Rental Default Insurance: If something causes your property to be extremely uninhabitable, like termite, rodents, or mold. This will provide you with a rental reimbursement to cover the money you’d get from the tenants.
  • Liability Protection: This part of your policy will protect you from lawsuits against you as a landlord. It provides legal and medical fees if the tenant was injured due to your property (Building collapse or maintenance damage).

Additional coverage

There are some optional features that are not that common but will come in handy and save your wallet in the long run.

  • Guaranteed income insurance: This feature provides the coverage if the tenant is unable to pay the rent for a month partly or even completely.
  • Emergency Coverage: If there is an emergency(broken door or leaking pipes) and the tenant calls you to fix that, this can help cover some of those costs.
  • Flood insurance: Many landlord insurance policies do not include flood protection. Choosing this can prove beneficial to you if you live in a flood prone area. This also includes municipal plumbing sometimes.

What is not covered?

Here is a list of things that will not be covered in your Landlord Insurance policy

  • Equipment and maintenance breakdowns: If the AC or toilet breakdowns, you will most likely have to pay for that from your own pocket.
  • The tenant’s personal property: This insurance won’t help to pay your tenant’s personal possessions, like clothes or electronics. That is included in renter’s insurance.
  • Shared property: if you have rented out a room or floor of your home, the Landlord Insurance will not be valid as it requires you to have a non-owner occupied property.

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