Landlord’s Insurance – What You Need to Know Before You Accept New Tenants

Landlord’s Insurance – What You Need to Know Before You Accept New Tenants

Wednesday, September 26th, 2012

If you own one or more properties that you already rent or plan to rent to tenants in the future, then having landlord’s insurance is essential. If you are a first-time landlord, however, you may find that you have many choices, which can appear to be very overwhelming at first. But when you look more closely at the policy types available and understand your needs as a landlord, you can begin to see which types of policies may fit your needs best.

Specific Coverage

The reason to get landlord’s insurance is that it has been designed specifically for rental properties. This type of insurance also goes beyond the coverage of traditional homeowners insurance. In fact, your lender may require you to have landlord’s insurance.

Common Specific Coverage Types

You may run into any of the following coverage types when seeking a landlord’s insurance policy. Each of these may offer you the benefits you’re looking for.

Legal coverage is of the utmost importance, as this is what will come to the rescue should a third party become injured or perish as the result of some type of activity on your property. Not having legal coverage can leave you wide open for lawsuits, which can drag on for years, all the while draining your bank account of the funds you need to improve and maintain your property for your tenants.

Coverage for contents may be required if you provide fully-furnished rental units to tenants. This will protect you in the event that a tenant does some sort of damage to your items. Many landlords opt to request that their tenants pay a damage deposit in lieu of getting contents coverage.

You may want to consider rent guarantee coverage, which will protect you in the event that you end up in a situation where your tenants stop paying their rent. This will allow you some leverage should you have to resort to eviction, as well as help you meet your rental payments. However, your tenants will have to be approved and verified by your insurance company in order for you to get this coverage.

Comparing Policies

Just as you would if you were a homeowner, comparing the amount of coverage each policy offers is important. Should you prefer a particular policy from a company but need more coverage, the option to add additional riders is usually available. However, each company will offer different additional coverage options.

You may be able to purchase specific coverage types individually, so as not to have to buy a package or upgrade to a more expensive package for the coverage you need. Some insurance companies will tailor your coverage to suit your specific needs, but you may not be aware of this option unless you ask.

At the very least, the policy you choose should cover damage to your property, as well as any damage incurred by your tenants during use of your building’s common areas like its walkways or recreational areas.

Premium Costs

In order to provide you with the most accurate quote, some companies will consider your tenants. For example, if your property houses students, you may incur higher premiums than you may if you provided housing to single professionals, simply because the risk of damage by the former is higher. Unfortunately, many insurance companies simply assume the worst in a student rental situation, which is something no landlord has control over.

Multiple Properties

Landlords who own more than one property will definitely want to consider a policy which protects all of them. Although you may have to purchase policies separately for all of your properties, there is no quicker or easier way to see the value of multiple property coverage than when something occurs on your property.

At the end of the day, having insurance coverage for your rental property just makes sense when you consider all of the potential costs, legal and otherwise, of not having your rental properties covered. Paying for your coverage means that you can divert the income you receive from renters into making your properties even more desirable places to live than they may already be.

Guest author Carly Jorge writes on a variety of topics, but is particularly well-versed on the topic of homeowners insurance.  She is a frequent contributor at The Home Protection Geek.  You can also find .