Rental properties face specific threats. As a landlord, you need to be proactive if you want to protect your investment. Most landlords often seek to know the best kind of insurance for their rental property. Some may think that having a homeowner’s insurance is enough. However, this is not true. That is because rental properties have more risks than your private residence.
The only time that the homeowner’s insurance may cover rental property is when you temporarily rent out your home. Therefore, short-term rentals do not require extra insurance except your homeowner’s insurance. However, if you want to rent your house as an Airbnb, your homeowner’s insurance will not be enough. You will need to get additional coverage or obtain the Airbnb endorsement for your property. The annual cost for this type of insurance will be more than your standard homeowner’s policy. Also, if you intend to rent out your property for a long time, you will need landlord’s insurance.
Why do you need landlord’s insurance?
As a real estate investor, you need to protect your rental property from the following:
Liabilities: The landlord’s insurance will protect you if the rental property incurs legal issues. It covers all the medical and legal costs in cases where tenants or their visitors sustain injuries.
Property damage: Your rental property is prone to more harm than your private home. That is because you are not residing on the property, and you may have bad tenants who are not careful with your house. However, your rental property will have cover against any damage to your personal belongings if you have landlord’s insurance. These include your appliances and furniture.
Structural damage: Water, fire, or vandals may destroy your property. The rental apartment can also sustain any form of structural damage. But with a landlord’s insurance to shield you from these events, you are sure to have peace of mind.
Floods: Your rental property may experience flooding after heavy rain, busted pipes, plumbing issues, roof leaks, and so on. For this reason, you need landlord’s insurance to protect you from all forms of flooding.
Loss of income: You may lose your rental income due to various reasons. Your property may not be habitable. During such times, you may not be receiving rent. Furthermore, your tenants may break the lease for several reasons. But some policies will protect you from all these forms of a sudden loss of rental income.
Acts of nature: The landlord’s insurance also protects your rental properties from natural occurrences such as earthquakes, tornadoes, hurricanes, and so on. You need landlord’s insurance, particularly if your property is within a neighborhood prone to any of these threats.
The cost of a standard landlord’s insurance
Several surveys show that landlord’s insurance costs about 20% more than the homeowner’s insurance. That is because rental properties have more risks than private houses. However, it is essential to note that this cost may vary for several reasons.
The type of rental property, location, and additional coverages can affect the premium. Also, if you are renting the property for the short-term, you will pay more premium than when you are leasing for the long term. That is because short-term tenants do not give much attention to the maintenance of rental properties.
Most short-term renters are negligent with the houses, and that makes them more prone to damage. Other things that may affect the cost of your landlord’s insurance include:
- Age of your property
- Value of the property
- Your credit scores
- The crime rate in the neighborhood
- The deductible amount you choose
- If the property is on mortgage or not
- Presence of features that can cause injuries. For instance, swimming pools or fireplaces.
- Perils that are covered by the policy
Will the land landlord’s insurance protect my tenants?
The answer to this question is no. The landlord’s insurance only covers properties belonging to the landlord. To protect their properties, your tenants will need renter’s insurance. That is the only way your tenants can enjoy insurance coverage. Some landlords often make the renter’s insurance a prerequisite before signing the lease agreement. They add this as a clause in the contract to prevent disputes if tenant’s properties sustain any form of damage or in the event of theft.
Will the landlord’s insurance cover the personal belongings of the landlord?
The landlord’s insurance will only cover all items or accessories that help in maintaining the rental property. That may include washers, dryers, and refrigerators. Other personal elements that do not add any maintenance benefits to the property will not be under the insurance coverage.
The bottom line
There are several types of insurance that can protect your real estate investments, but for your rental property, you require landlord’s insurance. For extra things that do not enjoy coverage under the landlord’s insurance, you can opt for add-ons to get maximum protection.
To get a quote on homeowners, rental, or landlord’s insurance, give A and H Insurance a call today or use the quote form on this page!
