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Landlord Insurance: A Complete Guide 2023

Landlord Insurance: A Complete Guide

Landlord insurance is a crucial way to safeguard your investment if you rent out the property to renters. According to Pew Research Center, individual landlords hold close to 72% of all rental units in the United States.

There are benefits to owning rental property, including monthly income. However, being a landlord comes with obligations, such as making sure you have appropriate landlord insurance to safeguard your investment.

What is landlord insurance?

Landlord insurance protects the owners of rental homes, condos, or apartments. Many landlords are private property investors who make money from rental fees. Landlord insurance helps them protect their investment in the structure of the home they rent out.

In some cases, the landlord may also live on the property, making it an owner-occupied building. In that case, the landlord may not be able to get landlord insurance, depending on the size of the property. For example, homeowners insurance can usually cover renting a room (or floor) of a house. However, home insurance is not for an apartment building with many individual units.

Landlord liability insurance

Although a tenant’s insurance covers their liability, a landlord owns and maintains the property. Landlord liability insurance helps pay for legal fees and medical bills related to a personal injury that is the landlord’s fault.

For example, let’s say that the patio is old and collapses while the tenant’s standing on it. Landlord liability would pay for the tenant’s and/or their guest’s medical bills and property damage. If the landlord gets sued for the collapse, their insurance could pay for all legal costs.

Landlord property insurance

Landlord property insurance covers the structure of your house and any detached structures like a shed. Detached structures get covered at 10% of your total dwelling coverage amount.

You might think landlord insurance covers all the same perils as a homeowners policy. But this kind of insurance is more limited. You’ll need to add landlord insurance endorsements if you want comprehensive property coverage.

Often, landlord insurance doesn’t cover theft or vandalism to the property. A landlord policy also won’t help pay for building code upgrades. Most insurance carriers can offer optional coverages separately, though.

Flood and earthquake damage also is excluded. Instead, you’ll have to buy individual policies for that. Often, these policies come from government agencies (like the National Flood Insurance Program or the California FAIR Plan). Some areas, like Florida, may require separate hurricane insurance as well.

Landlord insurance protects both the main structure of the house and any detached buildings. For example, a gazebo in the backyard or a detached carport is a detached building.

Loss of rental income

Let’s say your property gets damaged enough that your tenants can’t live there. Loss of rental income insurance will help cover rental earnings while tenants are away. Most policies include this extra coverage, but you’ll want to double-check for restrictions. For example, if you decide to renovate and upgrade the home, that might not qualify.

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