There are many benefits to renting out your home or property. But there are also many risks. Landlord insurance is designed to protect you when you become a landlord and your home becomes a business.
Whether you own a second home that you want to lease or a vacation home you want to rent out when you’re not using it, landlord insurance provides protection for property owners renting out homes, apartments, or condos.
Do you need landlord insurance if you have homeowners insurance?
Your homeowners policy most likely will not cover damage to your rental property (unless you’re only renting out a portion of the home you live in, like a basement or extra room). It is unlikely that homeowners insurance will cover you from liability claims arising from your business activities -- and renting your home is definitely a business endeavor. Only landlord insurance, which is also known as rental dwelling or dwelling insurance, protects you against financial loss that may result from a lawsuit or damage to property you rent to others.
What Does Landlord Insurance Cover?
Landlord policies provide coverage for physical damage to your property caused by fire, severe weather, break-ins, and other covered perils. It typically also covers your personal property left onsite for tenant use or maintenance, like the appliances inside the home.
Most landlord policies also include liability coverage in the event a tenant or guest is injured on the property and loss of income coverage if the property can’t be used while it’s being repaired due to damage from a covered loss. It can also cover you if you’re responsible for damage to someone else’s property.
Let’s say a fire breaks out and damages your property. Your landlord insurance would help you pay for repairs or to rebuild your rental home up to your policy limits, and may help compensate you for the rental income you lost during repairs if you have loss of income coverage.
If a tenant trips and falls on a loose step and is injured on your rental property, liability coverage generally will cover the cost of medical bills up to your policy limits. If the injured tenant decides to sue you because of the incident, your liability coverage can also help cover your legal bills, cost of defending yourself, settlements or judgments.
Landlord insurance provides different types of coverage, depending on your needs:
Property damage: Coverage for damage to your buildings and personal property due to covered losses, such as fire, storm damage, vandalism, theft, and even tenant damage.
Liability coverage: Protection against liability claims and lawsuits for third-party injuries or property damage claims. Liability coverage can help cover costs such as medical payments, legal fees, judgements/ settlements, and even funeral costs.
Loss of income: Rental reimbursement coverage for lost income in the event your property becomes unusable while being repaired or rebuilt due to a covered loss, such as a fire or severe storm.
Additional coverage: Ask your insurance professional about additional, optional coverage options to protect your investment. You may be interested in rent guarantee coverage, natural disaster insurance, landlord contents insurance, or employer liability coverage, to name a few.
Is Landlord Insurance Tax Deductible?
Being a landlord is considered a business and that means your insurance premiums are considered a business expense. That means your landlord insurance is a tax deductible expense.
Should You Require Renters Insurance?
Landlord insurance covers your property and your financial interest, but it doesn’t extend to your tenants personal possessions. Many landlords protect themselves against disputes over damaged tenant belongings by requiring tenants to carry renters insurance to protect their property against damage.
Landlord insurance is an important part of becoming a landlord. When you rent out your home or property you take on the risks of financial loss. Landlord insurance protects you against high costs of accidents, injuries, disasters, and liability issues associated with your rental property.