Rental Property Insurance: Details and Coverage

Rental property insurance, popularly known as landlord insurance, compensates for the unique set of risks that are associated with renting out your condo or home. The coverage includes liability expenses, property damage, and loss of rental income for property owners. Whether you are renting a vacation house, temporary house, an investment property, having rental property insurance will ease your mind from financial hazard associated with renters staying in your building.

Coverage of Rental Property Insurance

The coverage of rental property insurance can vary. However, the policies will basically compensate the structure of the building, valuables around the property that belongs to the landlord, loss of rental income, and liability coverage. Though the coverage is comparable to homeowners insurance, it offers distinct features that the aforementioned doesn’t have. 

Dwelling Coverage – similar to homeowners insurance, this insurance coverage also compensates the physical damage to your home. For instance, it will shoulder the expenses to repair the damages to your roof or walls, but not for the personal belongings of your guest. You should also determine the kind of risk covered by your insurance, including lightning damage, fire, and the likes.

Landlord’s Personal Property Coverage – Opposite to renters coverage, this one doesn’t compensate the personal property of the renters that stay in the rental unit. However, it typically covers for belongings owned by the landlord that’s left on the building. For instance, if you left a lawnmower in your property and it is destroyed in a fire incident, the damages of the machine will be compensated by your rental property insurance. But, if your renters bought their own air conditioning unit and it is destroyed in the similar fire, the unit and other personal belongings won’t be compensated by your rental coverage. When looking for landlord insurance or additional insurance policies, you need to determine if it offers coverage for your personal property – and if it does, up to what extent. There are times when this coverage is only provided as an optional feature or endorsement. Ask a trusted insurance company for a quote and explore various options. Finding the right company is key in this exercise.

Liability Coverage – the liability coverage will safeguard you from medical bills and legal costs from someone who experienced physical injuries in the premises of your property. Typically, if your visitor or resident is injured within your property, and you are found responsible it, your policy will compensate these expenses – even additional ones. Since rental property coverage also has limitations, you can buy an umbrella insurance for your apartment complex to expand your coverage.

Loss of Rent Coverage – this particular coverage offers protection against income loss if your apartment complex is still uninhabitable due to certain damages. You can consider this as a rent guarantee coverage. For instance, if your coverage includes fire incidents and fire damages are the main reason why your rental unit is uninhabitable, they will make up for your lost income. Check with your insurance company for possible riders.

Optional Features to Rental Property Insurance

The coverage given varies according to the carrier. This means that the coverage offered by the other, might not be available or just optional to some. Here’s a list of several examples of popular endorsements that you might want to add to your existing landlords insurance. Shopping and comparing is highly recommended to find the best price and coverage combination that suits your requirements. 

Optional or additional coverage endorsements:

• Ordinance or law coverage – this compensates for the loss of costs or value linked to enforcing local laws that cover the repair of the property due to insured loss. If this specific endorsement is a key criteria for you, you can contact your independent insurance agent to look for insurers that offer this add-on.

• Vandalism coverage – this typically compensates for expected physical damage to your home or property. There are many insurance companies that don’t cover the damages of vandalism, however, it is available as an endorsement. 

I Have Homeowners Insurance, Do I Need Another One?

The kind of policy you should purchase will depend on how frequently you lease your home and the time period of your renter’s stay. These distinctions are grouped into three categories:

• Long-term renting – if you own a vacation home, investment property, or second home that you plan to lease to one person, family, or couple for a long duration of time, buying this kind of policy is highly recommended. The duration usually ranges from six months or more. This is similar if you are renting your central residence for a longer time period every year.

• Infrequent short-term renting –if your goal is to lease your residential property for a limited time period, like a week or for several weekends, having a homeowner’s policy is enough to cover the risk to leasing your home. This particular coverage might be a basic standard in your policy if you only proper notice to your provider – upgrading the typical benefits of homeowners coverage up to the period that you allow your tenants to stay in your home.

• Frequent short-term renting – if your plan is to allow different tenants to regularly rent out your property for short amount of time, your home can be considered as a business, and it won’t fit rental property insurance nor insurance for landlords. Instead, you should buy some sort of commercial property policy to compensate for the risk associated with your business. 

Rental Insurance: How Much Is It?

Rental property insurance is at least 25% more costly compared to its counterpart, homeowners insurance policy. Considering that the standard price of homeowners coverage nationwide is at $1,083, you can anticipate that the average nationwide cost for rental property insurance is at least $1,350. The expensive cost is due to extra risks presented to the landlord via live-in homeowners, like physical injury claims made by visitors and renters or loss or rental income due to natural and unforeseen disasters. If you are planning to buy rental property insurance, it’s best to ask for help and guidance from reputable independent agents. They are knowledgeable in every concern regarding coverage and they will find you the best rental property insurance that suits your needs.