What is landlord insurance and what does it cover?

Landlord insurance provides property and liability protection for landlords and homeowners who rent out their homes or rental properties.

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Owning a home comes with a certain amount of risk, and if you rent it out, you’re potentially piling on even more risk. Tenants could damage your personal property, or someone could get injured while on the property and you’d be liable.

Like homeowners insurance, landlord insurance is designed to financially protect you and your home from property damage and accidents. The main difference between the two is that homeowners insurance is designed for people who live in their residence, and landlord insurance is catered towards those who rent out their homes for long periods of time.

If you have a rental property that you rent out long term, you’ll need to get a landlord insurance policy. If the home isn’t your primary residence and you use it exclusively as a rental property, you likely won’t be covered by standard homeowners insurance.

Key Takeaways

  • Landlord insurance is designed for people who rent out their homes on a long term basis and contains property, liability, and loss of income coverage

  • Landlord insurance is primarily meant for non-owner occupied residences

  • If you infrequently rent out your home on a short-term basis, you may be able to add an endorsement to your home policy for extra coverage

  • Landlord insurance does not cover your tenant’s personal property or liability, that’s what renters insurance is for

What does landlord insurance cover?

Also called rental property insurance, a landlord policy covers the rental property itself as well as certain types of personal property if it's damaged or stolen. Landlord insurance also covers legal or medical fees if someone gets hurt on your rental property.

Property damage

Landlord insurance covers property damage to your physical rental property and some of your belongings. Like homeowners insurance, each category of coverage has a reimbursement limit, or the maximum amount your insurer will pay you out for a covered loss. Different coverages also have their own separate deductibles too, which you can typically set when you purchase your landlord policy.

Property protection typically includes three different types of coverage:

  • Dwelling: Helps pay for damage to your rental property, including damage from fire, smoke, windstorm, hail, and more

  • Other structures: Covers damage to the detached structures on your rental property, like a detached garage

  • Personal property: Pays for covered losses to your personal belongings that you leave in the rental property. However, not all personal property that you leave in the rental will be covered. Landlord insurance typically only covers your personal belongings that are an essential part of your rental property, like your AC unit or lawnmower, but your policy may not cover the clothes you left behind or your personal coin collection. You should check with your insurer to learn what types of personal belongings are covered.

Liability insurance

Liability insurance can help pay for legal or medical expenses if someone gets hurt on your property and needs medical attention, or decides to sue you over their injuries. For example, if your tenant slips and falls down the stairs, and a court rules that your stairwell was not up to code, your landlord liability coverage could help pay for a lawyer. If your tenant breaks their leg, liability coverage can help reimburse their medical expenses.

Loss of income insurance

Landlord insurance may reimburse you for loss of income if your rental property becomes temporarily uninhabitable due to a covered loss, like fire damage. This coverage only protects you for a certain amount of time, depending on your policy limits and how long it takes to rebuild or repair your rental property.

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What does landlord insurance not cover?

There are certain instances and losses that a standard landlord insurance policy will not cover.

  • Tenant’s personal property: Landlord insurance protects your property, but not your renter’s — that’s what renters insurance is for.

  • Maintenance and wear and tear: Landlord insurance doesn’t cover property damage resulting from maintenance issues or general wear and tear. As the landlord and property owner, it’s on you to keep up with the general maintenance of your home.

  • Pest infestations: Coverage is also excluded for pest infestations, since they are seen as preventable with general everyday upkeep.

  • Shared property: If you live in a shared property and rent out a spare room, you may be ineligible for landlord insurance since the property technically isn’t non-owner occupied.

  • Flooding and earthquakes: Like homeowners insurance, landlord insurance excludes natural disasters like floods and earthquakes, but you can purchase standalone flood insurance or earthquake insurance policies for the rental property.

Landlord insurance vs. homeowners insurance

Homeowners insurance covers your home, personal property, and liability in the event your home is damaged, burglarized, or you’re held liable for an accident. As the name implies, homeowners insurance is meant for homeowners — people who own and live in their place of residence. On the other hand, landlord insurance policies are designed for non-owner occupied residences.

Although homeowners and landlord insurance offer similar protection, if you have a rental property that you rent out long term, you’ll need a landlord policy to be covered against property and liability losses. According to the III, many home policies exclude coverage for rental properties, or coverage will come with certain caveats if you rent out your home infrequently on a short-term basis. If you rent out a room in your home every so often for short periods of time, you might be fine with homeowners insurance if you notify your insurer. But some insurance companies will require a coverage add-on, or endorsement to your policy in order for short-term rentals to be covered.

It’s typically on you as the landlord to pay for property damage to your residence, not the renter, unless it can be proven that the renter intentionally caused damage or harm. Since homeowners insurance excludes coverage for rental properties, you’ll need landlord insurance in the event of a disaster.

Do I need landlord insurance if I rent out my property on Airbnb?

Airbnb is becoming more and more popular, but the company’s insurance policy isn’t always enough coverage to fully protect your rental. Airbnb offers their own insurance coverage: host protection insurance, which covers up to $1 million in liability coverage if a guest files a lawsuit; and host guarantee, which reimburses you up to $1 million if a guest severely damages your home.

Though this protection seems like a lot, it isn’t necessarily enough because it does not offer coverage for natural hazards or burglary. Landlord insurance may be a smart choice if you Airbnb your rental property long-term. But for short-term rentals, depending on your insurer, you may be able to purchase home-share, vacation, or short-term rental coverage.

Learn more about Airbnb and homeowners insurance

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