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Landlords Insurance Explained

If you're renting out your investment property, it's important to have landlord insurance to protect your valuable asset. You never know when accidents might happen, leaving you without the means to collect rent or even rebuild the property. Having landlord insurance can give you peace of mind that the investment will remain viable even during troubled times. Plus, landlord insurance for residential investment properties may be tax deductible.

Who is a potential candidate for landlord insurance?

Anyone who owns investment property that is rented out, even if the renter is a relative is a potential candidate for landlords insurance. Accidents can happen at any time, resulting in damage to your property or injury to someone on your property. As the owner of the property, you're liable if someone slips and falls on the stairs, for example. If the building burns down accidentally, you'll want the funds to rebuild again. If your relative decides to leave before the end of the lease and you're stuck without rental income, you'll wish you had coverage.

What typically does a landlord insurance policy cover?

Landlord insurance generally covers your rental building for:

  1. Accidental loss or damage caused by you, the property owner
  2. Vandalism and damage caused by tenants
  3. Certain defined events. These can vary depending on the insurance company, but often include fire, lightning, theft, storm, and earthquake.

Depending upon the insurance company, the policy may offer complete repair or replacement, or it may only cover up to the dollar amount you've chosen.

What typically does a landlord insurance policy not cover?

While the list of exclusions varies depending on the insurance company, landlord insurance will usually not cover events like:

  • Damage or loss caused by your failure to maintain the property
  • Flood or tidal waves
  • Soil movement or erosion
  • Damage from tree roots or insects
  • War

Additional coverage that policy holders might take out in this area

There are many additional policies you can add on to make your landlord insurance even more beneficial. Legal liability is an optional clause and a good one to get. Legal liability protects you if you are found liable in the event of injury or death of someone on your property. So if someone slips and falls on a loose stair tread, you can have peace of mind that the medical bills will be covered. Policies come in different amounts of coverage ranging from $5 million to $20 million.

Additional coverage for a landlord's insurance policy

You can get additional coverage for your contents if you provide furnishings or store your belongings in the rental property. There are also additions that cover loss of rent if your investment housing becomes unlivable due to an insured event, such as fire. You can also get coverage for rent that is unpaid by tenants who default. 

What will landlord insurance typically cost?

The premium for landlord insurance can vary a great deal depending on the company you choose, the size of excess you select, where the rental property is located, the size and details of the property, and other factors.

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