Landlord insurance covers property rentals such as homes, condominiums, and apartments. It’s a crucial part of protecting your valuable investment.

In this article, we’ll talk all about landlord insurance, why you need it, what it covers, and what it does not cover. Read on!

Why You Need Landlord Insurance

You need landlord insurance because a homeowner’s insurance doesn’t cover properties you don’t occupy.

Major insurance providers commonly offer landlord insurance, so you’ll have a lot to choose from. Landlord insurance policies have three general components:

  • The part covering the loss of rental income
  • The “building insurance” part, which covers damage to property structure
  • The “contents insurance” part, which covers damage to what’s inside the property

You can purchase landlord insurance for all sorts of investment properties, including townhouses, apartments, or condominiums.

What’s Covered

The following are the general coverage of landlord insurance:

Dwelling/Property Damage

Landlord insurance covers the cost of repair or rebuilding of your home when it suffers from a natural disaster, fire or electric malfunction, earthquake, vandalism, or negligent tenants.

If you can, get a policy that provides replacement costs, which is the amount of money that you must spend currently to repair or replace the property. Other policies only offer actual cash value, which is the replacement cost minus depreciation. Always aim for replacement cost coverage.

Loss of Rental Income

This feature protects you when the property becomes uninhabitable, which may be because of:

  • Severe mold
  • Termites
  • Vermin infestation
  • Sinkholes

The loss of rental coverage will temporarily reimburse you by paying the rental money you would otherwise get if the property was habitable.

To compare landlord insurance quotes with this feature, check out:

Liability Protection

This feature protects you against liability claims and lawsuits. For instance, if a guest or tenant is injured while inside your rental property because of something that you are legally responsible for, liability protection will cover bodily injury claims, medical costs, and legal fees.

Liability protection will also cover you if you’re found responsible for another person’s damage to property. For example, if a leaking pipe in your property damages your neighbor’s property, your landlord insurance will cover the costs of repair.

What’s NOT Covered

Although landlord insurance covers important events and incidents, not everything is covered. The following are things not covered by landlord insurance.

Equipment Breakdowns

If part of the property breaks down, such as the air conditioning or dishwasher, you will likely spend out of your pocket to pay for repairs. The same is true for any maintenance costs.

Tenants’ Properties

Landlord insurance does not cover damages to your tenant’s personal properties, such as clothing or electronics.

To have those items covered, your tenant needs to purchase a renter’s insurance policy.

How Much Does Landlord Insurance Cost

The average cost of landlord insurance is $1083 (as of 2019) for the year. Average premiums lie between $600 to $2000, depending on the city or state you’re in.

Compared with other types of insurance, landlord insurance is much more expensive since it takes on greater liability and the structures are often bigger than other properties.