Skip to main content

What kind of Insurance do you need for your Rental Property?

Being a landlord can be very stressful. You can remove much of the tension by getting three types of insurance policies. While they will not help you deal with bad tenants and middle-of-the-night phone calls, they can help protect your investment.

Landlord Insurance
Landlord insurance is like homeowner’s insurance in that it will protect you when wind, fire or another unavoidable act damages or destroys your rental. Many policies also cover the income that you would typically receive from your property while it is uninhabitable. Landlord insurance will also protect you, or one of your employees overlooked something, and a tenant got hurt.

When shopping for landlord insurance, be sure that the policy offers:

Guaranteed replacement coverage- This clause means that the insurance company will pay the cost of repairing the property, even if the costs exceed the original replacement amount.

Water and flood coverage – While many types of water damage, such as broken pipes, are covered under all policies, adding this clause ensures that you have coverage in the event of a flood, sewer backups or other types of flooding issues.

Personal property coverage- This clause protects any personal property you have in the rental, and it is imperative if you are renting a furnished apartment.

Acts of nature coverage- This clause is written in various ways and varies across the United States, depending on the geographical location. Still, it covers hurricanes, tornadoes and sometimes riots.

Liability coverage- This clause protects you if someone gets hurt on your property and asks you to pay for their medical fees. It can also help you fight cases in court.

Umbrella Policy
As a landlord, you also should carry an umbrella policy. It extends your landlord insurance above the limits set by that policy. It can also be instrumental in providing lawyers if a tenant decides to take you to court. While you need to check the individual policy, usually, you can cover rental properties under a personal umbrella policy, which is much cheaper than a business umbrella policy. Consider the amount of risk you are willing to assume, the value of all assets and the potential loss of future income when deciding how big an umbrella policy you need to buy.

Renter’s Insurance
You may also want to consider getting a renter’s insurance policy on each property. Alternatively, many landlords require their tenants to prove that they have this coverage that protects the tenants' belongings and living expenses if something happens. You may want to consider this type of policy because it extends coverage to guests who get hurt at one of your properties.

Consider which types of insurance policies are right for your circumstances. Then, be sure that you are comparing policies that contain the same clauses.