A Landlord’s Guide to Landlord Insurance
When you rent a property out to tenants you do not qualify for the traditional form of Homeowner’s Insurance. Instead, you must buy property insurance that is specifically written to protect your investment that is earning you a recurring profit each month. While landlord insurance is not something that is legally required by law, it is a protective barrier that all landlords need to protect the investment property and also the landlord’s liability. If you have one or more rental properties, find out how landlord property insurance protects your business revenues.
Who Is It For?
Some might assume that landlord insurance protects the tenant in the property. This is not at all the purpose of the policy. Instead, it will pay to repair or rebuild the property when it is damaged because of a covered loss. It will also pay for the property furnished by the landlord but not property owned by the tenant. Landlords may require that tenants buy separate policies to protect their own interests by writing the requirement into the lease.
How It Works?
Landlord property insurance is a standalone policy that is purchased on a specific property or building. Much like a homeowner’s policy, you will select the amount of building coverage and business property coverage that you would like to carry and the premiums will be based on the amount and other underwriting factors. You may also need to select the perils you would like the policy to cover. Once you select the limits, you will then choose an effective date and billing cycle. The term of the policy will last 12 months and renews each year.
Types of Coverage That Exist
* Property Damage: Pays for repair and replacement of the building and permanent structures when damaged by covered events.
* Contents: Pays to replace personal property owned by the landlord due to covered perils (not fixed to the structure).
* Liability Coverage: This is a form of business liability that will pay if a tenant or their guests are injured and claim that you are negligent for their injuries. There is a long list of different causes of injuries that you could be on the hook for.
* Loss of Income: If there is a damage loss, you will receive your monthly rents to compensate for your lost income while the property is uninhabitable.
Major Benefits of Landlord Coverage
Having landlord coverage can save you during a circumstance that would normally lead to financial devastation. Not only can you pass the burden of paying for labor, materials and covered appliances on to an insurer, you can also rely on your liability cover if a lawsuit happy tenant threatens to sue you. For just pennies per day, you can invest in peace of mind so that your business continues to thrive.