The importance of landlord insurance and how it protects your property investment

    Seeff shares the ultimate guide to landlord insurance and how it helps alleviate landlords’ costs.

    As a landlord, you are automatically at risk, and your property investment is what's at stake. From difficult tenants to property upkeep, being a landlord comes with many responsibilities and challenges. But landlord insurance can help protect your property investment against tenant damages, external threats, and financial loss. 

    What Is Landlord Insurance?

    Landlord insurance is there to make managing property easier for landlords. Many painful costs are covered with a landlord insurance policy. 

    Here are three things to know about landlord insurance:

    • It doesn’t matter if you own a small flat or an entire building. With the right landlord insurance policy, costs are covered, and you can rest easy at night. 
    • Landlord insurance is different from homeowners insurance, and you can only take it out if you rent the property out full-time. 
    • Landlord insurance policies can differ; there’s no one-size-fits-all. For example, if the fence around your rental property is damaged in a fire, it might be covered in some landlord insurance policies, but not necessarily the one you have chosen. 

    The Difference Between Landlord Insurance and Homeowners Insurance

    Are you unsure whether you qualify for landlord insurance? Read the following for the primary differences between landlord insurance and homeowners insurance.  

    • Homeowners insurance covers your personal residence. Landlord insurance covers the property you rent out. 
    • Traditional landlord insurance does not cover personal property within the structure. For example, in your home residence, your personal belongings will likely be covered by your homeowner's policy. But under landlord insurance, the personal items in your rental property (this refers to your tenants' belongings) are not covered.  

    Is Landlord Insurance Worth Having? 

    Landlord insurance is worth having if you want to protect yourself and your property investment from unforeseen costs. However, it is essential to note that deductibles and limits are also applicable. Make sure you're aware of these in your specific coverage plan. 

    Why should you have landlord insurance? Here are a few reasons. 

    • You will be compensated in the event of a covered peril. Fire, windstorms, and hail are all examples of covered peril. Should your rented property be damaged by such an event, your landlord insurance will likely apply.
    • If a tenant is injured on your property and you are found liable, landlord insurance can help cover medical costs and even legal fees.  
    • Your mortgage lender will likely require you to have landlord insurance if you rent out your property. You will also need to take out landlord insurance before letting your property to tenants. 

    Are You Legally Required To Have Landlord Insurance? 

    It is not a legal requirement to have landlord insurance. However, as stated above, your bank or mortgage lender will likely require it, and there are financial benefits to landlord insurance too. 

    What Does Landlord Insurance Cover?

    Your landlord insurance doesn’t cover everything, and it is imperative that you consult with an expert and understand the different policies. 

    Landlord insurance generally covers three things:

    • Dwelling coverage. This protects the structure of your rental property. 
    • Loss of rental income due to a covered peril event as included in the policy. These events can consist of fire, lightning, windstorms, and hail.     
    • Ensuing costs from damage to items used to service the rental property. 

    For example, if your beautiful patio furniture is ruined by a hailstorm and that patio furniture is the property of your rental property, then it could be covered by landlord insurance. But if that patio furniture is used by you, the homeowner, and not for the tenants staying in your rental, it will fall under homeowners insurance. 

    What Doesn’t Landlord Insurance Cover?

    • Unfortunately, a standard landlord insurance policy will not cover the damages resulting from natural disasters - i.e. flooding, mudslides, earthquakes, and volcanic activity. 
    • Landlord insurance will also not cover damage to the tenants’ belongings. This would fall under renters’ insurance and is the responsibility of your tenants.  

    Additional Coverage To Consider For Your Landlord Insurance Policy

    A standard landlord insurance policy doesn't cover everything, and to protect yourself and your property, you might want to consider adding additional items under your coverage. 

    • Theft coverage. 
    • Tenants’ possessions. It will be wise to urge your tenants to take out renters insurance before they move into your rental property. 
    • Vandalism coverage. 

    Can You Get Landlord Insurance For Multiple Properties? 

    Yes, you can. Multi-property landlord insurance is available to further improve your experience as a landlord. With multi-property insurance, you don’t need to take out a separate landlord insurance policy for each property investment

    The Benefits Of Multi-Property Insurance

    • Convenience. You can cover multiple properties in a single policy, easily adding or removing them when necessary. You only need to deal with one insurer and make one monthly payment. When you’re renting out multiple properties, this can save you a massive headache.  
    • Multi-property insurance is generally cheaper than a standalone landlord insurance policy; insurers often offer discounts when you want to take out multi-property insurance.  

    How Much Does Landlord Insurance Cost?

    The cost of your landlord insurance will depend on multiple factors. These include:

    • The location of your property.
    • How comprehensive your coverage is. 
    • Discounts; for example, you might qualify for discounts on your landlord insurance if you have an advanced security system.
    The insurance company.

    It’s a good time to be a landlord, and landlord insurance can make it even better. Visit Seeff to read our top tips for landlords.

    Author: Seeff Property Group
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