LANDLORD INSURANCE POLICY: What Is It & What Does It Cover?

It’s one thing to have rental properties and another thing to protect yourself and your investment from unforeseen casualties. As a landlord, having the right insurance coverage for your rental property can be the key to mitigating risks and ensuring the longevity of your investment. Your best bet in terms of quality protection is securing a comprehensive landlord insurance policy. This guide explores what it is and, more importantly, what it covers and the best providers. Our mission is simply to help you make informed decisions in protecting your rental property.

What is a Landlord Insurance Policy?

Landlord insurance is a type of insurance policy designed to protect individuals who own investment properties or rental properties. It provides coverage for risks that are specific to renting out a property, offering financial protection to landlords in various situations. Landlord insurance is often advisable for property owners who rent out their homes, apartments, or commercial spaces to tenants. It helps protect the landlord’s investment and provides a safety net in case of unforeseen events or liabilities. If you’re a landlord who wants to buy coverage for your rental property, kindly review the terms, coverage limits, and exclusions carefully to ensure that their specific needs are adequately addressed.

Features of Landlord Insurance Policy

While specific coverage can vary between insurance providers, typical features of landlord insurance may include:

#1. Property Damage

Property damage covers the physical structure of the rental property against perils such as fire, vandalism, or natural disasters. It may also cover other structures on the property, such as sheds or garages.

#3. Liability Insurance

Liability insurance protects you if a tenant or visitor is injured on the rental property and the landlord is found legally responsible. It may cover legal fees and medical expenses.

#4. Loss of Rental Income

If the rental property becomes uninhabitable due to covered damage, this coverage helps compensate the landlord for the lost rental income during the repair or rebuilding process.

#5. Contents Insurance

Some policies include coverage for the landlord’s personal property inside the rental property, such as appliances or furnishings that are provided to the tenant.

#6. Legal Expenses

Legal expenses coverage helps with legal fees in case the landlord needs to take legal action against a tenant or if they are involved in a lawsuit related to the rental property.

Landlord Insurance Policy Coverage

Under landlord insurance coverage, we’ll be looking at what it covers, what it doesn’t cover, and additional coverages that you can get with a landlord insurance policy.

What Does Landlord Insurance Cover?

In a nutshell, landlord insurance provides coverage for liability and loss of rental income if a property sustains damage from a covered peril, such as a fire, rendering it uninhabitable and unable to generate rental revenue. Additionally, the coverage includes the primary residence, detached structures situated on the premises, and personal property owned by the policyholder.

The following are coverages you’ll likely see in landlord insurance policies:

#1. Personal property

The concept of personal property in a landlord’s insurance policy refers to items used to maintain the rental property. In other words, it’s the indemnification of personal belongings used for the upkeep of the leased property.

#2. Other Structures Coverage

The policy may extend coverage to structures that are not physically attached to the property, such as a fence.

#3. Dwelling Coverage

The concept of dwelling coverage refers to the insurance policy provision that offers financial protection for the physical structure of a residential property. Landlord insurance typically provides coverage for physical damage or loss incurred by the property due to various issues, including but not limited to wind, hail, and fire.

What Landlord Insurance Doesn’t Cover

Landlord insurance policies do not provide coverage for the loss or damage to a tenant’s possessions. For instance, in the event of a flood causing damage to a tenant’s appliances, the landlord’s insurance does not provide coverage for the tenant’s goods.

Additional Landlord Coverage to Consider

Landlord insurance may offer other coverage in a policy, too. The following are some of the optional coverages you can often add to a policy:

Burglary
Vandalism
Building Codes
Floods

Other coverage includes:

Fire department service charge
Collapse of property
Debris removal
Trees, shrubs, and plants

Landlord Insurance Policy Cost

According to the Insurance Information Institute, there is an approximate 25% increase in the cost of a landlord insurance policy compared to a homeowner policy with similar coverage.

Is Landlord Insurance the Same as Umbrella Insurance?

No, landlord insurance and umbrella insurance are not the same, and they serve different purposes. Landlord insurance is designed to protect property owners who rent out their properties. It typically provides coverage for the physical structure of the rental property as well as liability coverage. On the other hand, umbrella insurance is a broader form of liability insurance that provides additional coverage on top of the underlying policies you may already have, such as auto or homeowners insurance.

What Is the Difference Between HO5 and HO6?

The HO5 policy is a comprehensive homeowners policy with broad coverage for the structure and personal property, while the HO6 policy is specifically designed for condominium owners, addressing their unique needs related to condo ownership.

What Does a Landlord’s Insurance Policy Not Cover?

There are exclusions in every insurance policy. The following are some of the exclusions in a typical landlord’s insurance policy:

Tenant’s personal property
Tenant Negligence
Wear and Tear
Unoccupied Property
Flood Damage
Earthquake Damage
Intentional Acts

Does Landlord Insurance Cover Hurricane Damage?

Yes, some providers offer coverage for hurricane damages. However, this depends on the specific terms and conditions outlined in the policy. In many cases, standard landlord insurance policies provide coverage for certain types of weather-related perils, but it’s important to review the policy details to understand the extent of coverage.

What Disaster is typically not Covered by Property Insurance?

The following are some of the disasters not covered by property insurance:

Floods
Earthquakes
Sinkholes
Mudslides
Nuclear Accidents.
War and TerrorismIntentional Acts
Wear and Tear

Commercial Landlord Insurance Policy

Commercial landlord insurance is a form of insurance coverage specifically designed for landlords who own and manage commercial properties. These are office buildings, retail spaces, and warehouses. The policy provides indemnification against property damage, compensation for the loss of rental income, and accountability for injuries or damages arising from incidents transpiring on the premises. The primary purpose of this insurance policy is to safeguard the landlord’s financial investment and mitigate the expenses associated with property repairs or reconstruction in the event of a loss.

What Insurance Do Commercial Landlords Need?

The principal objective of commercial landlord insurance is to guarantee comprehensive protection for one’s property against all potential threats it may encounter. With many people using the premises, a commercial property may pose a danger to someone or something under diverse circumstances; hence, landlords must have appropriate insurance policies to ensure enough coverage. Commercial landlords should take into account several aspects, such as the type of property, level of risk, and other relevant considerations when determining the appropriate insurance coverage. In light of these considerations, landlords may need to consider one or more of the following types of policies:

#1. Commercial Property Insurance

Commercial property insurance protects landlords from fires, floods, storms, theft, and vandalism. It also includes legal liability for tenant injuries and slip-and-falls on the rented property. If an emergency compels tenants to leave, the policy may cover additional living expenses. Commercial property insurance protects landlords’ assets against unforeseen losses.

#2. General Liability Insurance

General liability insurance covers business landlords for tenant- or employee-caused bodily injury, property damage, and personal and advertising injury. It also includes landlord performance and negligence claims. Landlords with several properties benefit from this coverage since it protects them from lawsuit fees.

#3. Income Insurance

Rental property owners who depend on rental revenue need this protection to help them if their property becomes uninhabitable or stops earning. Property owners can protect their revenue from unexpected occurrences that prohibit rent collection with income insurance. It compensates rental income lost due to fire damage, tenant default, or other reasons tenants miss payments.

Others include:

Flood and Earthquake Insurance
Wind Deductible Buy-down Insurance
Commercial Umbrella Insurance

Best Landlord Insurance Policy

The following are some of the best landlord insurance policy providers:

#1. State Farm

First on our list of the best landlord insurance policies is State Farm. The primary reason why State Farm made it to our list is because of the numerous add-ons in its landlord insurance policies. This includes business property, identity restoration, an ordinance of law, and so on. Presently, State Farm has an A++ rating from AM Best and an S&P Global Rating of AA.

The policyholder’s owned properties, including single-family homes, multi-family units, and apartment buildings, are all fully covered by State Farm’s landlord plans. It will also include coverage for general liability, loss of income, equipment breakdowns, and losses related to heating and air conditioning systems, among other potential risks. In addition, the insurance policy will provide coverage for any other structures that are connected to your property, such as fences, storage buildings, and garages.

The insurance coverage of each landlord is distinct due to the diverse circumstances associated with each property. State Farm offers the option to personalize coverage by incorporating various supplementary features, such as data compromise and identity restoration. These additional provisions serve to assist in the recovery process for businesses affected by data breaches or landlords who have fallen victim to identity theft. According to State Farm, the inclusion of ordinance or law coverage is automatic, with a minimum amount provided. This coverage is meant to make up for the loss of value and extra costs that come up because of local laws or rules that affect the building or fixing up of structures that were damaged by an insured loss

#2. Foremost

This list of the best landlord insurance policies will not be complete without Foremost. This is because of the several benefits that landlords receive when they choose to rent out their homes. Foremost Insurance Company provides tailored coverage to accommodate the specific needs of individuals, regardless of whether they possess a single rental property or multiple properties. If you’re a landlord who buys, sells, or manages properties, this is ideal because it ensures adequate safeguards are in place. Another feature that sets Foremost apart is that it offers extra coverage, which is uncommon among most providers. This includes loss of rental income, limitations on liability, personal harm, damage to other structures, repair costs, and water damage resulting from sewers and drains, among others. The financial strength ratings of the company have been assigned an A+ rating by AM Best.

Foremost also provides elective replacement cost coverage, which can fully reimburse the value of your property without any deductions for depreciation. In essence, Foremost distinguishes itself by consolidating all rental properties under a unified landlord policy, offering a convenient and economically efficient solution.

#3.Travelers

Travelers Insurance provides traditional landlord insurance policies suitable for single-family homes and multi-family units. This enables property owners to safeguard their structures, as well as any accompanying outbuildings. One of the amazing things about it is that it can be customized to meet specific requirements while avoiding unnecessary coverage. Like State Farm, Travelers has an A++ rating for financial strength from AM Best. With a Travelers landlord insurance policy, you can get coverage for many risks, including damage, theft, premises liability, medical payments, and loss of usage. While I love the fact that it provides a diverse array of discounts to its clients who choose to bundle multiple policies or maintain a claim-free record for a designated duration, there’s a but: you’ll have to work with an agent because you won’t get much information on their landlord coverage.

#4. Liberty Mutual

Liberty Mutual’s landlord insurance policy offers comprehensive coverage for both physical structures and liability, as per normal industry practices. In addition to wind and hail, the coverage also includes fair rental value. One notable feature that distinguishes this provider is its round-the-clock claims assistance. Moreover, discounts are available to individuals who choose to combine their homeowner’s insurance policy with a landlord’s insurance policy or to those who have maintained a claims-free record for five years or more. Due to its A rating from both AM Best and Standard & Poor’s, Liberty Mutual is well known as a significant provider of home and auto insurance. Unfortunately, you’ll have to speak with an agent to get the most out of this coverage.

#5. American Family

American Family Insurance provides a comprehensive range of landlord insurance options that can be tailored to suit individual requirements. Under these plans, landlords will receive automatic general liability coverage for their rental structure. Since traditional coverage is never enough, American Family provides add-ons such as flood insurance and coverage for ancillary structures, including sheds, fences, and garages. Unfortunately, you’ll have to speak with an agent to get the most out of this coverage.