5 Things You Need to Know About Landlord Insurance

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If you are a new landlord, you’re in the right place. You’ve decided to take on a new challenge that may define your career as a rental property investor. There is money involved allowing you financial and personal freedom.

However, things can happen with your rental properties in a blink of an eye – and your existing homeowners insurance policy may well be insufficient to protect you from major costs and expenses. That’s why it is always important to consider getting a landlord insurance quote for your properties. While your income is through tenants who pay rent every month, you still need to pay for expenses as well to keep your properties in good condition.

Needless to say, insurance is a necessary expense. If you want to know exactly how it can protect you from the unique challenges that face landlords, then keep reading as we talk about the five things you need to know about landlord insurance:

1.   Insurance prices depend on a variety of factors

While deciding on an insurance policy, the price may depend on various factors. This could include but not limit itself to the property or properties’ location, size, and the cost of rebuilding or making repairs following damage. On top of this, you may also need to consider the additional security measures that need to take place.

These include replacing locks, installing security systems, and more. The insurance policies available to you may also differ in various states or jurisdictions. This may be due to insurance laws and regulations.

2.   It only covers your property, not your tenant’s

In the event if your property is damaged for one reason or another, the insurance covers your property and yours alone. Any personal belongings of your tenants that are damaged will not be covered under your insurance policy. For this reason, you may want to suggest to your tenants that they should get renter’s insurance so they can take care of the expenses for lost or damaged items on their end.

3.   Know what is covered

What will your landlord insurance cover? What won’t it cover? We’ll answer the question on what can be covered first.

For one, it will cover any costs that are incurred for when you need to repair or rebuild your property. This includes any additional structures such as garages or sheds. If a tree falls on your shed, it’s covered since it happened on your property.

Property damage (due to fire, water, etc.), theft, and burst pipes will usually fall under the types of situations where landlord insurance would be covered. Also, if the property is badly damaged to the point where it is uninhabitable, you can receive what is known as loss of use coverage.

You may lose income since the renter will not be on the property. From there, the insurance company will make sure that you are paid accordingly until you are able to fix or rebuild the property. The reimbursements will be temporary.

Lastly, there is liability protection. This will come in handy should someone get hurt or have their property damaged on your property. If it ends up going to court, your insurance will pay for any attorney fees and the like.

4.   Know What Isn’t Covered

Now that you know what’s covered, let’s talk about what is not covered by landlord’s insurance. Starting off, we take a look at appliances that may fail or malfunction. This can be due to wear and tear, mechanical issues, or other causes.

You must pay out of pocket if you plan on repairing or replacing these items. As mentioned earlier, your tenant’s personal property will not be covered under your insurance. Also not covered is damages due to floods, earthquakes, or water backup.

There is specific insurance for such natural disasters that are available. So there is no point in your homeowner’s insurance covering it, especially if you live in an area where such occurrences happen regularly.

5.   Multiple properties could be covered under one policy

Depending on the insurer, you could have multiple rental properties owned by you covered under the same plan. For example, if you own two or three apartment buildings, you probably won’t need to sign up for a separate insurance plan.

You can simply work out a deal with the insurer so you can pay a little more under the same policy. This will save you not just time, but also money as well.