Landlords: House Insurance—Who Pays?

Landlords require a different type of insurance to homeowners. Landlord insurance is designed to protect the landlord's income and property in the event of tenant-related damage, certain disasters, and liability claims. This type of insurance is particularly important for landlords who do not live in the property they are renting out, as homeowners insurance typically only covers owner-occupied homes. Landlord insurance can also cover liability for bodily injury or property damage that occurs from the use of the property, as well as medical costs if someone is hurt on the property. Additionally, landlord insurance can protect against the loss of rental income if the property becomes uninhabitable or a tenant unexpectedly moves out.

Landlord insurance covers property damage from natural disasters, accidents, and theft

Landlords require insurance that covers them in the event of tenant-related damages, disasters, and liability claims. This is because homeowners' insurance does not cover rented properties.

Accidental damage caused by tenants is also covered by landlord insurance. For example, if a tenant accidentally starts a fire, causing smoke damage to the property, or if they overload the washing machine, resulting in water damage, landlord insurance will cover the cost of repairs.

Landlord insurance is designed to protect the landlord's income and property in the event of damage, providing peace of mind and financial security.

It also covers liability protection for landlords if a tenant is injured on the property

Landlords are responsible for tenant injuries in the rental property's common areas. They are business owners and should be prepared for tenant injuries. A comprehensive landlord insurance policy will include liability protection, which covers medical or legal costs if a tenant or visitor is injured due to a property maintenance issue. This could include icy walkways, architectural collapse, or an out-of-control beehive, for example.

Liability protection is an important aspect of landlord insurance as it provides financial protection in the event of a tenant injury. Landlords have a duty of care to their tenants and visitors, and this includes keeping common areas clean and free of debris, advising tenants and visitors of any dangers, and providing a habitable rental unit. If a landlord fails in this duty of care and their negligence causes a tenant injury, they may be held liable.

To prove negligence, tenants must show that the landlord had a duty to fix a dangerous condition, that they failed to meet this duty, that the landlord's negligence caused the injury, and that injuries or damages resulted from the landlord's behaviour. For example, if a landlord does not fix a broken step and a tenant falls and breaks their ankle, the landlord will likely be held liable as they failed to take reasonable steps to avert the accident.

In addition to liability protection, landlord insurance typically includes property damage coverage and lost rental income coverage. Landlords should be aware that their homeowners' insurance policy will not cover a dwelling that is not owner-occupied, so separate landlord insurance is necessary.

Landlord insurance is more expensive than homeowners insurance due to higher risk

Landlords are advised to take out landlord insurance, as their homeowner's insurance will not cover them in the event of damage or disasters. Landlord insurance is more expensive than homeowners insurance, and there are several reasons for this.

Firstly, landlords face different risks to homeowners. Landlords are responsible for any damage sustained to their property while a guest or tenant is renting it, whereas homeowners are only responsible for their own actions and their own belongings. Landlords are also responsible for completing any repairs and complying with local ordinances and regulations.

Secondly, landlord insurance covers the cost of damage to the property, as well as any loss of rental income. It also covers legal fees and litigation costs if a third party is injured or suffers damage to their property while on the premises. Landlord insurance can also cover wrongful eviction lawsuits and discrimination claims from former tenants.

Thirdly, tenants have less interest in preventative maintenance and reporting minor problems before they become major issues. This means that insurance companies receive more claims from rental properties than from owner-occupied homes.

Finally, a vacation property may be occupied by different tenants every week, representing a much higher level of risk to an insurance provider.

The cost of landlord insurance depends on the property size, features, and the type and amount of coverage the landlord needs. It typically costs about 15-25% more than a conventional homeowners insurance policy.

Homeowners insurance does not cover rented properties

Landlords need to be aware that homeowners insurance does not cover rented properties. If you are renting out a property, you will need landlord insurance to cover you in the event of tenant-related damages, disasters, and liability claims.

Homeowners insurance is designed to protect your primary residence and the possessions within it. It is typically a requirement when taking out a mortgage. This type of insurance covers the cost of replacing the home and personal property in the event of a total loss, as well as providing liability coverage for injuries that occur on the property. However, it is important to note that homeowners insurance does not extend to rental properties.

Rental properties come with unique risks that are not covered by homeowners insurance. When you rent out a property, you need to consider the potential for tenant-caused damage, increased wear and tear, and a higher risk of injury on the premises. Landlord insurance is specifically designed to address these risks and protect your investment. It covers property damage, liability protection, and loss of rental income, which reimburses you for rent lost due to the unit becoming uninhabitable.

It is important to understand the difference between landlord insurance and homeowners insurance to ensure you have the correct coverage for your rental property. Landlord insurance can protect you from unexpected out-of-pocket expenses and provide peace of mind as a landlord. Speak with your insurance provider to determine the specific coverage you need for your rental situation.

Landlord insurance can cover lost income if the property becomes uninhabitable

Landlords can face a loss of rental income if their property becomes uninhabitable due to an insured peril, such as a natural disaster, fire, plumbing issue, or storm. In such cases, landlord insurance can provide financial protection by covering lost income. This type of coverage is known as loss of rental income insurance or fair rental income insurance.

Loss of rental income insurance is typically included in standard landlord insurance policies, but some providers offer it as a separate type of additional coverage. This insurance covers lost income when a property becomes uninhabitable due to covered perils such as windstorms, hailstorms, or riots. It is important to note that coverage durations may vary, with some policies providing coverage until repairs are complete or up to a maximum of 12 months, whichever is shorter.

Landlords can claim lost rental income if their tenants have to move out due to an insured event, such as a flood or fire. This insurance can also protect against the additional costs of arranging alternative accommodation for tenants. In some cases, landlords may be contractually obliged to provide alternative accommodation, so this coverage can help mitigate the costs. It is worth noting that loss of rental income insurance does not cover all situations, and there may be exclusions for certain perils like flooding or earthquakes.

To ensure adequate protection, landlords should carefully review their insurance policies to understand their limits and deductibles. Additionally, some mortgage lenders may require rent loss insurance on rental properties they have financed, so it is essential to check the details of the specific landlord insurance policy. By having this coverage in place, landlords can protect their income and manage their finances effectively during periods when their rental properties are uninhabitable.

Frequently asked questions