Income properties can be rewarding, but it’s important to get the right type of insurance for your situation. After all, a property can’t live up to its income-producing potential if damage makes it impossible for you to rent it out.
A standard home insurance policy doesn’t cover rental properties, so most landlords need landlord insurance. This coverage is usually provided through a DP3 policy, or landlord insurance. That's what our customers in Florida and Louisiana get. But the protection is also available in House & Property insurance.
Read more about the differences landlord insurance, homeowners insurance, and renters insurance below, or let our quote process help you figure out the right coverage for you.
What is landlord insurance?
Landlord policies cover a number of things, such as:
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Property. This includes the dwelling, other structures, and any personal property used to service the rental that you leave onsite (think of your snowblower and lawn mower).
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Fair rental value. Sometimes called “fair rental income,” this is the part of your landlord insurance that covers the most important business aspect of your property: the rental income. In the event that a covered event makes the property temporarily unfit for occupation, this may help you maintain your income stream.
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Liability. This may help you cover legal expenses or medical bills if someone is injured on your property. This is one of the biggest areas for concern, as liability claims can be much more expensive than property claims, which is why it’s one of the greatest incentives for ensuring you have the right coverage.
The same coverage is also available in House & Property insurance. The base policy provides the same sort of protection found in a traditional DP3 policy.
Need more information? Check out our state-specific guides:
What’s not covered? Usually, maintenance costs and tenants’ belongings. Unlike regular homeowners insurance, the contents of the dwelling are not covered by this policy. Tenants should take out their own renters insurance policies to ensure their valuables are covered.
How landlord insurance works
Here are a few hypothetical examples to demonstrate the ways your landlord insurance can save you from a major unexpected expense.
Scenario #1: Your tenant throws a rager. One of your tenants throws a party where an inebriated guest falls down an exterior flight of stairs that were in need of repair. Landlord insurance can help you pay for his medical bills.
Scenario #2: The old slip-and-fall. Say you decide to rent your apartment out, and you forget to de-ice the sidewalk one winter. If your tenant's guest is injured, they can sue you for their damages.
Scenario #3: Your rental property catches on fire. If your residential rental property catches fire, you’re likely covered for structural damage and income loss. Your policy should help you repair damage to the building as well as replacing the income you’re not receiving from tenants while work is being completed. The tenant’s belongings, of course, are not covered by your landlord insurance but could be covered under their own insurance if they carried a renters insurance policy.
Sidebar: Airbnbs have some special insurance considerations. Not all insurance companies cover properties used for short-term rentals, but the ones we work with sometimes can. Just ask us about it!
Other considerations for landlords
Landlord insurance is just the first step towards protecting your investment property. The next is doing what you can to reduce the likelihood of damage. Some suggestions include:
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Getting a home warranty. As a landlord, you may want to consider a home warranty for items that manufacturer warranties don’t cover or for those that have aged out of their warranties. This can be a huge cost saver as you scale up your portfolio of investment properties (no pressure), even if you have a trusted maintenance contractor on speed dial.
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Checking in on unoccupied spaces. You’d think an unoccupied property would be less trouble than one full of tenants, but an empty space can suffer water damage or a rodent infestation with no one around to report the events. The litany of possible issues is far from reassuring, so it does behoove you to either regularly look in on your investment property or hire someone to do so even when it’s not actively pulling in rental income.
Pro tip: Check your policy language to see what type of occupancy or vacancy limitations or requirements it contains.
Get more ideas for protecting your investment in 15 tips for first-time landlords.
When do you need landlord insurance?
The question of landlord vs. homeowner insurance isn’t that complicated. If you’re making money off of your property by charging rent, then you most likely need landlord insurance.
But we get it – sometimes it helps to talk to an agent to make sure you’re getting the right coverage for you. That’s why you can call 855-717-0022 to speak to a representative. But if you’re ready for a quote, enter your address now.
