What Is Landlord Insurance?

When you rent property to a long-term tenant, you remain responsible for certain risks. Learn what landlord insurance covers and why it’s a must-have for rental property owners.

Renting out property is an excellent way to supplement your income, but it also exposes you to unique risks. Before you start drafting lease documents and vetting potential tenants, learn how to protect yourself and your property with a landlord insurance policy from Southpoint.

What Does Landlord Insurance Cover?

If you rent out a residential property that you don’t occupy for an extended period, your homeowners insurance policy won’t cover property damage, liability lawsuits, or other claim events. You need a landlord insurance policy to keep your rental property and your financial interests protected while a tenant occupies your space.

While similar to home insurance policies, landlord policies include additional coverages that homeowners don’t need, such as loss of rental income coverage. Additionally, these policies exclude coverages that renter’s insurance provides, including personal property coverage for your tenant’s belongings. Essentially, landlord insurance is a bridge between your typical home and renter’s policy.

Comprehensive landlord insurance policies typically contain three types of coverage: liability, property, and loss of rental income insurance.

Landlord Liability Insurance

As the owner of a rental property, you may be held liable for injuries or property damage occurring on your premises. For example, if a tenant’s visitor slips and falls on an icy sidewalk on your property, they may sue you for medical bills and ongoing rehabilitation costs. Alternatively, let’s say you install a cabinet in your tenant’s kitchen, which later falls and damages the contents inside. Your tenant could sue you for the cost of their damaged property.

If you purchase landlord liability coverage, you will receive financial assistance for both scenarios. Your policy covers defense costs and settlement amounts, preventing you from paying thousands out of pocket. Lawsuit costs can add up quickly, but liability insurance protects you from the financial repercussions.

Landlord Property Insurance

When you rent property to a tenant, they are responsible for protecting their personal belongings. However, you are responsible for insuring the dwelling, fixtures, and furnishings supplied for tenant use. If a natural disaster, fire, theft, or other covered peril leads to damaged or lost property, you will receive a claim payout from your policy up to a specified limit.

Every landlord insurance policy is different, which is why you should thoroughly read your policy coverages and exclusions. You might have to purchase supplemental coverage for damage caused by an earthquake or hurricane. Additionally, your insurance company may require a policy endorsement or separate limit for appliances left onsite, such as washing machines, stoves, and lawn equipment.

Landlord Rent Insurance

If you rely on your investment property to supplement your income, you could suffer financial loss if your property becomes uninhabitable. For example, a fire could ravage your rental property, cause irreparable damage to the kitchen and living area, and require months of structural and cosmetic repairs. During that time, your tenant would have to move out, leaving you without your regular rental income.

As long as a covered loss caused the damage to your property, your policy would cover the missed rent payments for a specified period outlined in your policy. Typically, once repairs are completed, a tenant moves back in, or a certain amount of time passes—whichever comes first—your policy stops paying for loss of rent.

Need More Information About Landlord Insurance?

Landlord insurance is complex, and every policy is different. If you need an expert’s help to determine the policy limits and optional coverages you may need for your rental property, Southpoint can help.

How Much Does a Landlord Insurance Policy Cost?

Like other personal insurance coverages, your landlord insurance premium depends on several different factors. Your location, policy limits, deductible, safety features, and property size impact your insurance costs. Additionally, if you purchase optional coverages for your property, you will pay more than you would for a basic policy. These optional coverages can include:

  • Flood insurance: Most landlord policies exclude flood-related losses. If your property is in a flood zone, you may need to purchase additional coverage.
  • Rent guarantee insurance: Loss of rental income coverage only applies after a covered loss. It does not cover loss of rent if a tenant fails or refuses to make payment. However, you can purchase rent guarantee insurance to cover lost rental income for a specified period if your tenant defaults on their payments.
  • Building code coverage: Your area’s building codes may have changed since your rental property was constructed. After a loss, you may have to pay extra to bring your rental property up to code. Building code coverage can help you pay for these unexpected costs.

Because rental properties are more prone to risk than owner-occupied properties, you can expect to pay up to 25% more for your landlord policy than you would for homeowners insurance. A good insurance agent like Southpoint can help you keep premiums to a minimum and find the most affordable coverage for your needs.

Southpoint Is Your Source for Comprehensive Landlord Insurance

Finding the right landlord policy isn’t as simple as filling out a short form and clicking a button. You have to identify your distinct needs and decide how much risk you’re willing to take on. Don’t settle for the first coverage option you find—let Southpoint gather quotes from the most reputable insurance companies and guide you in your decision.

With over five decades of experience in the industry and the most experienced professionals on our team, Southpoint offers insurance expertise you can’t find anywhere else. Our team members can pinpoint coverage gaps in your landlord insurance that other agents don’t catch and ensure you’re covered when it matters most. Plus, we offer every type of coverage you need to protect your other assets, from personal auto insurance to boat coverage.

Managing a rental property is hard enough without the extra burden of acting as your own insurance agent. If you need help from an award-winning company with unrivaled expertise, look no further than Southpoint. Get in touch today to learn more about our landlord insurance options or request a quote.

close up view of landlord handing tenant keys after signing lease contract

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