As a landlord, ensuring the security of your rental property means many different things. It includes not only liability protection from property damage, but also injury protection and other insurance types, as well as security and design measures that keep the property safe to inhabit in general.
Use this guide of the 4 things every landlord should know to keep their rental property safe to learn about insurance coverage that can protect your valuable rental property. Comparing major policies like those from landlord insurance is only possible if you know why insurance is necessary and what kinds of protection it offers. Knowing the kind of protection possible is a way to save money on policies, but it should never replace them completely.
Figure Out if You’re a Landlord or a Homeowner
The difference between a landlord and a homeowner may not seem huge in theory, but it could completely change the required insurance policy coverage. Insurance needed for a rental property differs from insurance needed on the property that you live in.
The amount of time a property will spend being rented will help determine which type of policy you need. For instance, if you only rent a property occasionally or live there at the same time that you rent, you may want to opt for a homeowners insurance policy.
Otherwise, a landlord insurance policy could be the better option. Knowing how often the property will be rented out will determine which policy you need.
How Much Coverage Do You Need?
The amount of coverage needed to protect a rental property against damages largely depends on the owner’s situation. The first thing a landlord needs to do when calculating their target level of insurance coverage is to figure out how much the property and its contents are worth and compare that to the coverage offered by the policies.
One of the tricks of shopping around for landlord insurance is that policies drop in value much more quickly than they drop in price. In other words, you might be giving up $25,000 in coverage for just $5 less a month.
Average priced policies are often the most desirable as a result. One thing every landlord needs to know straight off is that a policy with too much coverage is preferable to one with too little.
What’s Covered by Landlord Insurance?
Landlord insurance policies are divided into several main types of coverage. As the owner of a rental property, you’ll need all of them to keep your place safe. Knowing the difference between types of coverage can help with policy comparisons and with determining how much coverage you need.
Property damage coverage is ideal for landlords who have budgeted high for furnishings in their rental property, such as fixtures and fancy furniture. This part of landlord insurance or homeowner’s insurance plans covers damage to property resulting from burglaries, fires, or other eventualities.
Dwelling coverage is more general and covers damage to the actual structures on the property. This includes damages that need to be rebuilt or repaired in the house or other structures on the property like separate offices, garages, and sheds.
Liability protection contains coverage that landlords need in the event of a lawsuit against them related to damages or injuries on their premises. Bodily injury claims include legal and medical costs incurred on the property. The more tenants a landlord houses, the more important this type of coverage becomes.
Finally, loss of use insurance pays out to a landlord when a rental property becomes unlivable due to extenuating circumstances such as a fire or a burst pipe. Loss of use or loss of rental income insurance reimburses owners for the rent that they can’t collect while the premises are empty due to repairs.
Landlord insurance is very different from homeowner’s insurance. Which you need relies heavily on how often the property you own will be rented out. Once you decide the type of insurance you need, breaking it down by the type of coverage, including liability protection and property damage coverage, you can decide how much you need.
As a landlord, use this guide to know what’s covered so you can get the policy that fits your property.