Do I need landlord insurance if I'm renting out my property?
As a landlord, it's important to protect your investment and ensure that you are financially covered in the event of any unforeseen circumstances. One way to do this is by purchasing a landlord insurance policy for your rental property (note: landlord insurance is different than renter's insurance. If you want to learn more about renter's insurance policies, see our other article below).
But is landlord insurance required? It depends. Should you get it? Definitely.
93% of American homeowners carry property insurance for their home. If you have a mortgage on your property, your lender will likely require you to carry some form of home insurance to protect their interests along with yours. And while most homeowners are aware that they need to carry homeowner's insurance, many homeowners don't know that their insurance policy needs to be updated if they convert their primary residence into a rental property. If you don't, many insurance companies may actually discontinue your coverage or deny any future claims!
What is covered under a landlord insurance policy?
As a landlord, you encounter unique challenges and risks. So while the average landlord insurance costs 15% more than the standard homeowners insurance policy, we highly recommend that all landlords purchase landlord insurance. Landlord insurance covers a wide range of potential risks, damages, and liabilities, including:
- Accidental damage to the property caused by tenants or their guests (not including wear and tear)
- Loss of rental income due to property damage or other covered events
- Liability coverage in case of claims arising from injuries on the property (which can also cover legal fees)
- Personal property if you furnish your home for tenants (this is for your personal belongings, not the tenant's)
- Medical expenses in case of minor injuries (X-rays, ambulance rides, etc.)
What types of losses are covered under a landlord insurance policy?
Many policyholders wonder what is a covered loss under their landlord insurance policy. Every policy and carrier is slightly different, but common covered perils include:
- Water damage
Natural disasters (excluding floods and earthquakes, as you will typically need to purchase a separate flood insurance or earthquake insurance policy)
Making the right decision with your insurance can provide you and your tenants peace of mind. If you have any questions or concerns, our Homeflow agents are here to help! We work with 35+ insurance providers and specialize in helping landlords get the financial protection they need for their real estate investments.
Whether it's getting advice on your deductible amount, deciding between actual cash value or replacement cost coverage, understanding exclusions on your policy, or deciding whether you need an umbrella policy to get more personal liability insurance, we are here to help! Or if you'd like a self-service option, Homeflow's online platform can get you multiple insurance quotes in 5 minutes or less.
Note: If you are a short-term rental property owner (ex. renting your property on Airbnb or VRBO), you need to make sure that you let your insurance agent know. Certain insurance companies will not provide insurance coverage for short-term rentals and might change the type of policy required.
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