Landlord Insurance

Insurance Considerations for Landlords

Typical homeowners' policies will not cover you if you're a landlord. You'll need to purchase specific insurance policies designed for income generating properties to get coverage. While the basic insurance coverage for the structure itself is not much different between a general homeowners' policy and a landlords' policy, there are some extras that you can get as a landlord that are not available otherwise.

Building insurance

Building insurance covers the building itself. Much like traditional homeowners' insurance, it will pay to repair or replace the structure itself should it become damaged due to flooding, fire or other calamities. The repair or replacement cost is subject to a deductible, of course, which you would still be responsible to pay. Like most other types of insurance, you have a choice in the amount of deductible you want to pay. Generally, higher deductibles mean lower premium costs. Be cautious when selecting a high deductible amount: while you're not planning on needing the coverage, if something were to happen you need to be sure that you can afford to pay the cost of your chosen deductible up front.

Contents insurance

Contents insurance will cover the furniture, fixtures and appliances inside the building. It will only cover those items that belong to the building; it will not cover your tenants' personal property. This coverage may also be subject to a deductible and again, higher deductible amounts mean lower premiums.

Liability insurance

Liability insurance covers your liability for injuries other people incur while on your property. It would pay for the medical bills and non-economic damages for anyone who becomes injured on your property because of some unsafe condition of which you should have been aware and should have corrected. For instance, you would be covered against the injury claims of a tenant who slipped and fell while walking in a common area of your apartment complex. Liability insurance is very important for any property owner to carry, especially landlords. The standards of negligence under the law for property owners are quite low. This means that you are basically liable for any injury that happens on your property. For this reason, it is best that you have insurance to protect you and your business.

Rent guarantee

Rent guarantee coverage is a type of insurance specific to landlords. It will pay your tenants' rent if your tenants refuse to pay or if you have prolonged vacancies. Only offered in the United Kingdom at first, this type of insurance is now available in the United States. While this may seem to good to be true, this type of coverage does exist. However, in order for it to apply, you must have a credit agency run a professional credit check on all of your prospective tenants before they move in. This means that if you have existing tenants before you bought the coverage, the coverage will not apply to them.

Having the proper coverage is particularly important for landlords. You need to make sure that both your property and your rental income are protected in the event that the unthinkable occurs.