Landlord Insurance is different to home insurance as it includes elements of cover that are specific for rented out properties.
This is where landlord insurance comes in. These policies come in all shapes and sizes; before you begin price-shopping, consider what you need to specifically address and protect against in your rental property.
A good, comprehensive landlord insurance policy will have three core protections:
- Property damage: This is coverage in the event that the real estate or furnishings suffer from a natural disaster, fire, electric/gas malfunction, earthquake, vandalism or irresponsible tenants. If possible, try to get a policy that offers replacement cost or replacement value, instead of the actual value (especially if fixtures and furnishings are old) or a predetermined lump sum of cash.
- Lost rental income/rental default insurance: Should something cause your property to be totally uninhabitable (severe mold, termites, a rat infestation or a sinkhole), this feature provides temporary rental reimbursement to cover the rent money you’d otherwise receive if tenants could be occupying the property.
- Liability protection: This is coverage for the medical or legal costs that might ensue if the tenant or a visitor suffers injury due to a property maintenance issue
The Bottom Line
Before you decide to rent out a piece of property, take a look at your homeowners insurance policy. Don’t assume it will cover damages and liabilities while you’re not living there. If you want to protect your home and rent it out as well, landlord insurance is a must.