Landlord Insurance

A landlord insurance policy overlaps with conventional homeowner’s insurance.  For example, if your property is destroyed by fire, landlord insurance functions to reimburse you in the same way that homeowner’s insurance would.

However, landlord insurance can also go well beyond that to protect you from many other risks.  Depending on which policy you choose, landlord insurance could additionally cover any or all of the following:

* Lost rent due to building damage causing the building to temporarily be uninhabitable.

So you not only get paid to make necessary repairs, but you get paid what you would have received in rent while the repairs are being done.

* Legal fees incurred in a dispute with your tenant.

For instance, if you have your lawyer write certain letters, file certain documents with the court, etc. in attempting to collect from or evict an uncooperative tenant, you would be reimbursed.

* Judgments won by a tenant against you.

Let’s say a tenant is injured on the property he’s renting from you, sues you, and wins.  The insurance company would step in and pay.  And even if you don’t lose the lawsuit, you’ll surely still have legal fees, which, again, the insurance would cover.

* Your possessions that are damaged or destroyed in the property.

Your landlord insurance won’t cover your tenant’s possessions – they would need renter’s insurance for that – but it will cover yours.  Even if a landlord doesn’t rent property out as a fully furnished house or apartment, there often are at least some items there that belong to the landlord, such as a refrigerator or other appliances, carpeting, etc.  Those are what landlord insurance will cover.

Again, what precisely is covered will vary from policy to policy.  You may choose a comprehensive policy that covers most or all of these and more.  Or you might choose a more limited “peril” policy that covers only one or a small number of types of loss.

In addition to coverage issues, there are of course other factors to consider when choosing landlord insurance.  Do you want to pay more and receive full replacement value for anything lost or damaged, or do you just want actual cash value?  Also, different policies have different deductibles, so all else being equal, you’ll pay more for one with a lower deductible.

If you rely on the income from your rental property, landlord insurance can provide significant peace of mind.  As always, shop around and make sure you pick the policy that best fits your circumstances and budget.