Landlord Liability Insurance – What is it and do I need it?
- June 20, 2022
- Posted by: Guerrilla Group
- Category: Personal Lines
Landlord insurance is designed for landlords: or people who own properties and rent them out. This type of insurance is similar to homeowners insurance, in that the policy is designed to protect homes. The main distinction between the two is that Landlord insurance treats the rental property as a business.
This form of insurance serves a similar purpose as a homeowners policy—they both protect homes. Landlord insurance is distinct because insurers providing the policy treat the rented home as a business.
While landlord insurance is paid by the landlord to protect the home from damages and the landlord from any liability, this type of insurance does not cover the renter.
Renters’ insurance is insurance that is paid for by the person that is renting the home from the landlord. This insurance policy will protect the renter’s possessions and the renter from liability.
A renter’s insurance policy will provide no protection for the home at all.
Renter’s insurance is not a requirement by law, however, it is a common practice for landlords to require the renters to obtain this insurance prior to signing their lease.
What does Landlord Insurance cover?
Landlord liability insurance typically protects against the primary items of a traditional homeowner’s policy with the addition of:
- Tenant or tenant guest injury while on the property
- Tenant or tenant guest damage to the property
- Uninhabitability, or if a tenant leaves the property unlivable
A benefit to Landlord insurance is that it can provide the landlord with guaranteed income insurance. In most policies, this is optional coverage that will pay the income from a property when / if the rent goes unpaid — for instance if a renter is not able to pay the full amount of the rent this insurance will supplement the difference. Insurance providers will usually offer this type of coverage for an additional fee.
How Much Insurance Do I Need On A Rental Property?
The rule of thumb would be to protect your investment and your business as much as you possibly can. It is typically recommended that a landlord have:
- Minimum coverage that includes property damage
- Liability coverage up to 1 million dollars
- Loss of income coverage
The above three areas are typically considered the most important by landlords for protecting their property and business.
Do I need Landlord Insurance?
To protect your property and your business, Landlord Insurance is a vital aspect. The investment could protect you from serious financial distress. Landlords are exposed to different types of risks than homeowners are and they should avoid protecting themselves against them.
Still not sure if you should get landlord insurance? Contact one of our licensed agents to discuss more.