What does landlord insurance cover?

  • Planning ahead
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  • Landlord insurance
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Landlord insurance, also known as dwelling and fire insurance, is a safeguard for property owners who rent out their spaces. Unlike homeowners insurance, this policy covers potential hazards and liabilities associated with renting out a property. Without this coverage, landlords might face personal liability for damages or for property repairs or replacements.

This specialized insurance typically includes coverage for property and dwelling, safeguarding the physical structure, coverage for other structures like garages or sheds, liability protection, compensation for lost rental income and coverage for landlord-owned items within the rental property. Being aware of what is covered under this type of insurance can help you make informed decisions and safeguard your assets.

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What does landlord insurance cover?

Dwelling coverage

What does dwelling coverage cover? Dwelling coverage typically includes protection for the physical structure of the rental property, such as the walls, roof, floors and built-in appliances.

Common perils covered by dwelling coverage – Dwelling coverage often guards against perils like fire, lightning, windstorms, hail, explosions and certain types of water damage.

Examples of covered losses – Covered losses under dwelling coverage might involve scenarios like a fire damaging the property, a severe storm causing roof damage or vandalism impacting the structure of the rental unit.

Liability coverage

What does liability coverage cover? Liability coverage protects you from financial responsibilities if a tenant or visitor suffers injury or property damage on the rental premises. It can also help cover legal fees and medical expenses.

Common types of liability claims – Liability coverage commonly addresses incidents such as slip-and-fall accidents, dog bites or property damage caused by negligence.

Examples of covered losses – Covered losses could include medical expenses if a tenant is injured on the property or legal fees if a lawsuit arises due to property-related injuries.

Loss of rental income coverage

What does loss of rental income coverage cover? Loss of rental income coverage helps compensate you for the income lost when a rental property becomes uninhabitable due to a covered peril, such as a fire or severe damage.

How is loss of rental income calculated? It's usually calculated based on the rental income that you would have received during the period of property repair or rebuilding.

Examples of covered losses – Covered losses might involve scenarios like compensation for lost rental income while repairs are being made due to a fire that renders the property uninhabitable or during extensive water damage restoration.

Additional coverages

These additional coverages offer further protection and financial support beyond standard landlord insurance policies, leaving you better equipped to handle various unforeseen circumstances that may affect your rental properties and business operations.

  • Business personal property coverage – This coverage protects your personal property that is used for maintaining the rental property, such as tools, equipment or supplies kept on-site for property maintenance.
  • Ordinance or law coverage – Ordinance or law coverage helps cover the costs associated with repairing or rebuilding a property to comply with updated building codes or ordinances after a covered loss.

What doesn’t landlord insurance cover?

Landlord insurance policies, while offering comprehensive coverage, also come with specific exclusions. Being mindful of the exclusions below empowers you to make informed decisions about your coverage and consider supplemental protections if necessary.

  • Tenant negligence or intentional damage – Damage caused deliberately by the tenant or due to negligence on their part may not be covered.
  • Wear and tear – Normal wear and tear of the property typically isn't covered by insurance policies.
  • Unoccupied property – If the property remains unoccupied for an extended period without proper notification to the insurer, certain damages might not be covered.
  • Certain natural disasters – Some natural disasters like floods or earthquakes might not be covered under standard landlord insurance policies. Additional coverage may be required for these perils.
  • Illegal activities – Damages resulting from illegal activities conducted on the property are generally excluded from coverage.

How to choose a landlord insurance policy

Factors to consider

Understanding the nuances of landlord insurance policies involves careful consideration of various elements. Here are key factors to keep in mind:

  • Property specifics – Assess the property's type, location, size, age and specific risks associated with the area to determine the necessary coverage types and limits.
  • Coverage options – Evaluate the range of coverage offered by different policies. Be sure that the one you select aligns with your desired protection, including dwelling coverage, liability, loss of rental income and additional coverages like fair rental value or ordinance or law coverage.
  • Exclusions and limitations – Thoroughly review the policy's exclusions and limitations to understand what is not covered. Identify any gaps and explore options for additional coverage if needed.
  • Insurance company reputation – Research the insurer's reputation for customer service, claim handling and financial stability. Reviews and ratings from other landlords or industry associations can provide valuable insights.
  • Cost and deductibles – Compare premium costs and deductibles among different policies. Make sure that the coverage adequately meets the property's needs – saving money on premium costs can be more expensive in the long run if the coverage or deductibles don’t match your needs.

How to get the best rate on landlord insurance

Here are key tactics to consider for maximizing insurance value:

  • Bundle policies – Consider bundling landlord insurance with other insurance policies, such as auto or umbrella insurance, as it can lead to discounted rates.
  • Risk mitigation measures – Implement risk-reducing measures on the property, such as installing security systems, smoke detectors or fire extinguishers. These safety features can potentially lower insurance premiums.
  • Shop around and compare – Obtain quotes from multiple insurers to compare rates and coverage options. Different insurers may offer different rates for similar coverage.
  • Maintain good records – Keeping a clean claims history and demonstrating responsible property management can lead to lower premiums.
  • Discuss with an agent or broker – Work with insurance agents or brokers specializing in landlord insurance. They can provide guidance, explain policy details and help find the most suitable coverage at competitive rates.

By considering these critical factors and implementing strategic measures, you can confidently navigate the complexities of selecting a landlord insurance policy. VIU by HUB can guide you through the intricacies of policy selection, offering tailored solutions that suit the unique requirements of their rental properties. Contact the VIU by HUB Advisory Team to get started today.