A Quick Guide to Understanding Landlord Insurance

If you are looking for a profitable long-term investment, look no further than real estate investment. Renting out your apartment can generate a steady flow of income if the house units are in good condition. Unfortunately, being a landlord can be stressful.

You need to understand that it’s more than just owning a property to rent to the customers. Even with the best management practices, things can get awry. Finding the right insurance policy and insurer is essential. Below is a quick guide to understanding landlord insurance.

What does landlord insurance cover?

Landlord insurance policies cover the risks you may encounter when renting out your house units to the tenants. It protects you against any losses or liability on the property. You must understand that this insurance cover differs from the homeowner’s or the renter’s insurance. 

Sometimes expensive covers can even cover loss of rental income in cases where the tenants move out following an insured event. Though, this cover doesn’t cover the tenants. The best thing tenants can do is rent house units from established rental companies. Boulder rental companies like Evernest, Hello Landing and Renters Warehouse provide the best property management services that benefit both the landlord and the tenant.

Landlord insurance policies are mainly broken down into three categories, and they include:

Liability coverage

The liability coverage covers the expenses incurred by guests or tenants injured while on the property. This coverage is very vital if the tenants sue you against property negligence on the maintenance part. Remember that accidents can happen, and you will need money to cover lawyer fees and other medical expenses that the particular tenant will sue you against.

Property damage

Property damage covers appliances, furniture and any other property owned by the landlord. This cover doesn’t cover the tenants’ damages. If the tenants need insurance, they can opt for their separate renters’ insurance policy. As a landlord, you should encourage your tenants to purchase renter’s insurance cover before moving into your house units.

Loss of income

Loss of income cover is precisely what it sounds like. There are instances where tenants cannot pay their rent due to specific perils that are out of control. With the loss of income cover, you will protect yourself against loss of revenue.

Does the law require landlord insurance?

Across all states, no legal obligation requires you to have landlord insurance. Though, sometimes buy-to-let mortgages often have the condition that requires you to have this insurance cover. 

Sometimes if you rent out the house units to family members, you may feel there is no need to have this policy. But you need to remember that your house can get damaged and this cover will significantly help in such moments.  

How much does landlord insurance cost?

In most cases, the cost of landlord insurance is 25% more than that of the homeowners’ insurance policy. Ensure that you look for established companies that offer affordable policy coverage. Most insurance carriers see fewer risks for owner-occupied homes than rental units.

It’s common sense that property owners will take care of their property, unlike the customers. The other factor that results in a higher cost for landlord insurance than homeowners is that landlords have higher levels to protect themselves from legal fees and lawsuits.

Discounts do exist, but you need to understand that they are not deal-driven like other types of insurance coverages. The higher the number of safety devices you have installed on your property, the higher the chances of getting discounts. Discounts can also depend on the number of properties that you have insured. When you insure multiple rental units with the same company, you lower the premium on each policy.

Tips when seeking landlord insurance

When seeking landlord insurance, you need to consider how much you pay. There are different ways you can save money on your insurance. 

Ensure that you choose a specialist insurer. In most cases, getting an insurer who will offer landlord coverage is more effortless. However, getting the cover at an affordable price is not that simple. Compare the deals offered by different insurance companies. Working with a specialist insurer can help in fastening the decision-making process.

You can also consolidate your policies. Remember that the variety of needs the insurance cover must meet can be huge. If possible, you can opt for the policies which can group the needed coverage. These could be clauses that cater to additional coverage, as this will save you a significant amount of money. It will also save you from the hassles of ensuring everything is covered.

Ensure that you are very accurate in the rebuild value. When buying the landlord insurance policy, you will be asked to provide the rebuild value for your rental property. If you underestimate the rebuild value, you may be left with extra expenses to pay for in case of an accident. 

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