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Anyone who rents residential property to others has specific landlord insurance needs that are unique to property investors. While some of the coverage may seem similar to any other property insurance, rental property insurance policies do have some important differences.
The terminology can vary, but every landlord insurance policy should have coverage for the structure itself. This might be referred to as the Dwelling coverage or the Building coverage depending on the policy. Replacement cost is ideal and you’ll want to cover the full value of the structure.
Coverage for the contents of a rental home is not always necessary, but you don’t want to overlook it if you need it. If the home is furnished or there are items that you keep at the house (lawn equipment, etc) that are needed to help maintain the property, you’ll want to make sure you have contents coverage. Depending on the policy type, this might be called BPP (Business Personal Property) or Landlord Furnishings. Replacement Cost coverage is ideal, but you can save some money if you are willing to take Actual Cash Value for the ‘stuff’ you keep in the rental.
Protecting yourself from lost rent is one of the most important and unique features of a landlord insurance policy that only applies to rental properties. If there is a claim on the property and it becomes uninhabitable as a result, the policy will reimburse you for the rent that you are unable to collect from your tenant. Some policies may even have extensions that could help you supplement the replacement rent that your tenant might have to pay to find another place to live on short notice. The comparable coverage on homeowner policies would be “Loss of Use”. You may also see it referred to as Business Income Replacement since rent is technically a form of business revenue for the landlord.
Liability for landlords is also very important and a little unique. Depending on whether you are an individual or if you have a separate business or LLC established that owns the property, you may be able to extend coverage from your primary homeowner policy, but it is very important to confirm whether that is the case. In many cases, the Landlord Insurance policy will have it’s own liability component that protects you from injuries that might be sustained on the premises- whether by tenants or visitors. This is critically important since the exposure is constant. It is a much more significant consideration than a homeowner’s policy- where you only have the occasional visitor or delivery man. In this case, there are people on the property every day that could get injured in any number of ways- and if they do, you can very easily become the subject of a bodily injury lawsuit simply because you own the property.
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