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What is Landlord Insurance?
Landlord Insurance is a type of Insurance that is used by property owners who either rent out or lease their properties. This type of insurance offers different types of coverage for both the property and for liability protection. This means that your property insurance can cover any damages to both your property as well as, to any of the furnishing within it that was provided by you as part of the rental agreement. It can also provide you with insurance that covers the loss of rental income, or the loss of income that comes from long periods of no occupancy.
There are also extras that can be added to your landlord insurance which will help cover even more potential financial losses that might be incurred because of your property being rented or leased. Essentially, Landlord Insurance is there to minimise the potential financial loss of renting or leasing out your property.
What does Landlord Insurance cover?
Landlord insurance policies usually cover damages incurred in a property or home that you are renting out. There are also service items used for the property that are also at times covered by Landlord Insurance. Here is an overview of what is covered by most Landlord Insurances.
Property damages: Your Landlord insurance will help alleviate and cover the costs of repairing your rental property in case of fire of flood. It will also cover costs for the repair of the structure of the building or for damages to some items that were provided by you as part of the rental property.
These could include built-in features, such as a fitted kitchen or bathroom, or furniture, such as beds, sofas, carpets etc. That were provided by you as part of the rental agreement that you had made.
It will also help cover the costs of your boiler breaking down or any repairs that need to be made in your properties plumbing or electrical systems.
In the case that your tenants are the ones to cause accidental damage to the property, repairing that damage is also covered by your landlord insurance policy. This means that you will not need to worry as much about any repairs that appear during a tenancy or even after it, as property damages are usually covered by your insurance policy.
Property’s other structures: If the property that you are renting out is a house then it might be that there are other structures within your property. Your landlord insurance policy covers repairs on structures that are detached from your dwelling, but still are a part of your property. These could include a shed or a detached garage or even simply a fence line. All of these structures are part of your property and as such any damage caused to them will be covered by your insurance policy.
Personal Property: If you have provided your tenants with any equipment for the maintenance of your rental property, these could include a lawnmower or snow blower, and the equipment becomes damaged, your landlord insurance should be able to assist with covering the damages caused. Be aware that this part of your policy does not include any items that were left behind but they are not used for the servicing of your property (such as a TV, bicycles, home cinemas, audio systems etc.).
Landlord liability protection: In the case where one of your tenants or someone else incurs damages that are determined by court to have been your fault as you failed to maintain the property properly, you will be responsible for covering both the legal expenses as well as the medical bills of the person who got hurt. Your landlord insurance protects you as it can cover both the legal costs of having your case taken to court as well as any medical expenses that the court determines you should be responsible for.
Rental income: If your property is not able to be rented out due to property damage then that would mean that there would be a period of time in which you would not be able to receive your rental income. In these cases, your landlord insurance could cover your rental income, which means that you would not incur as big of a financial loss as you might have had it not been for your insurance policy.
Many landlord insurance policies will also cover rent loss caused by vacant periods between tenants moving in and out of your rental property.
If you are renting out a property and you are worried about any of aforementioned potential damages then you should consider getting a landlord insurance.
What extras can I add to my landlord insurance policy?
While your landlord insurance covers most of the most common types of property damages there are also many extras that you can consider adding on to your policy. These are often determined by the geographic area that your property is located in or the condition that your property is in. Here is an overview of some of the extras that you could add to your landlord insurance policy.
Vandalism: Cases of Vandalism damage are not usually covered by landlord insurance policies, unless it is added as an extra. If you know that in your area there are many vandalism cases you might want to consider getting vandalism coverage. This coverage will mean that repairs that need to take place so as to restore the property will be covered by your insurance policy and as such you will not be responsible for bearing the entire financial cost of repairing the property.
Burglary: This is another form of damage that is not traditionally covered by your landlord insurance policy. If your house is broken into and there are damages to your property you would need to take care of those costs on your own, unless you have purchased an extra within your policy that assists you in covering those costs. It is important to note that burglary coverage does not include replacement of stolen items. For covering theft, you might be able to add an additional option that helps cover the cost of stolen appliances left in the property.
Property under construction: If you have a property that is not yet ready to be rented out as you are in the midst of renovating or building the structure you could consider purchasing a policy which protects your structure until construction is completed and you are able to rent it out.
Building codes: Depending on your area when repairing parts of your rental property you might also be legally required to upgrade you wiring, or ventilation system. This is because city policies might have changed since your property was initially constructed and as such, it no longer fits the current legal standards for a rental property. Normally, making these upgrades would be costly, but if you have purchased this extra your insurance policy could reimburse you for part of the costs of the repairs and replacing the parts of your property that need to be replaced for it to fit the current standards.
These extras are important to consider when you are determining which policy and company you wish to use for your landlord insurance. Depending on your area some extras might be more necessary than others, but in any case, these will allow you to have peace of mind when you are renting out, repairing or building your rental property.
What is not covered under Landlord Insurance policies?
While we have covered what coverage your landlord insurance policy can provide for you, the following list will cover some of the things that are not currently covered under most landlord insurance policies. These could include the following:
Tenants’ belongings: Your landlord insurance policy will not cover any of the damages or loss of tenant belongings (as mentioned above regarding burglaries). If your renter would like these items insured, they can purchase their individual insurance policy, which will cover damages to their items. As a landlord you also have the right to request that all your tenants purchase a renters insurance policy and provide proof of this policy as part of approving the contract. This type of insurance can cover the tenant’s belongings in cases of theft or in cases where the property got damaged in a flood or fire and their items were destroyed. You can read more about renters insure by clicking here. If you would like to read more about the reasons you should require your tenants to get renters insurance you can click on the following link.
Maintenance and Equipment: Any maintenance in your property that does not relate to your actual property but rather to the furnace, dishwasher or laundry machine in your property is most likely not covered by your landlord insurance policy. Any repairs or replacements of this equipment will need to fully be covered by your and your insurance company will not be able to reimburse you for any of this damage.
Property Shares: You will not be able to get a landlord insurance if you are sharing a property. The reason for this is that most landlord insurance policies have it as a rule within them that the owner of the property is not allowed to occupy the property. What this means is that if you live in a house and you are looking to rent out one of the rooms in your house while you are still occupying it, you will not be eligible to add a landlord insurance policy to your property. What you could attempt to do is that you could try to upgrade your current home insurance policy so that it can cover more damages than it previously did. More importantly, you can check if there is a liability policy that you can add within your already existing home policy, so that you can be covered in any liability case that might arise.
What is the cost of Landlord Insurance?
Finding the correct landlord insurance for you might be hard, but one of the main things that you will need to consider is what is covered under your landlord insurance policy and at what cost. Simply finding the cheapest landlord insurance policy, but then having it not cover everything within your property is something that you should avoid.
So, when choosing your landlord insurance, it is useful to remember some of the factors used to determine the cost of your landlord insurance. Here is an overview of some of the factors that are used to determine the cost of your insurance.
1. Location: Depending on how safe the area that your property is located in is, you might be required to pay more or less for your insurance.
2. Claim history: If you have previously made many claims and have a large claim history you might find that your landlord insurance comes at a higher cost.
3. Level of coverage: Depending on the level of coverage you need the cost of your insurance might be higher. This includes the maximum limit that your insurance will be able to cover as well as all the deductibles and limits in your policy. Any extras that you add in your policy will also affect the cost.
4. Property Security: Alongside the location of your property, the security measures already installed in your property, which includes alarms and security locks, can help lower the costs of your landlord insurance policy.
5. Condition: If your property is in a well-preserved condition, then your insurance costs will be lower.
6. Tenant history: Regarding the rent guarantee that is part of your insurance policy you might find that your tenants employment status and history can affect how much your insurance policy is willing to cover. The more secure your tenant’s employment is the more your insurance policy will be willing to cover for you.
Choosing the correct insurance for you can be hard, especially considering how many different insurance companies are out there offering different services at a different cost. This is why we recommend reading a comparison list of the best and most commonly used available policies. In this way you can get an idea of what is usually offered in a landlord insurance policy. If you would like to read a comparison of some of the best insurance policies currently available you can click here.
Once you have gotten a better idea of what some of the best offers for landlord insurance policies are you can visit our website to receive customised quotes for your landlord insurance. In this way you will be able to compare what the price range for landlord insurance policies available to you is and thus you will be able to make a more educated choice regarding your own insurance policy. To use our price comparison and quotes service you can click here.
Is Landlord Insurance necessary for my rental properties?
While we have covered what is and what is not covered by Landlord insurance policies you might still be left wondering whether it is necessary for you to get a landlord insurance policy for your rental properties. A landlord insurance policy might not be a legal requirement for your rental properties depending on where your property is, however it is highly recommended that you consider getting one as it covers both damages and liability cases that could arise from you renting out your property.
You might be thinking that your standard home insurance policy is enough to cover any of the costs of damages incurred for your rental property, whether those damages were made deliberately or accidentally. However, that is not the case usually as your home insurance policy is most often invalidated as soon as you rent out your property. This is something that you can always check in your current insurance policy, but in most cases standard home insurance policies will not allow you to file claims for properties that have been rented out or leased.
Finally, if you have decided to purchase rental properties as an investment and are looking to get a buy-to-let mortgage you might find that a landlord insurance policy is a mandatory requirement for qualifying for your loan. This is because the bank will want to ensure that the property that you are purchasing through a mortgage is appropriately insured for damages, and as most standard home insurances wouldn’t cover a rental property, as such, a landlord insurance is required.
Having a landlord insurance policy in place means that your property will be safe from damages so in case of any damage caused you will not lose income to the same extent that you might have lost it should the policy not have been in place. It will also mean that you will have a liability policy so in the case of any claims made against you, you will not have to bear all the medical and legal costs on your own. This is why it is important to consider getting a landlord insurance policy so that you can have security when renting out your property.