Renting out a property can be very profitable, which makes it especially important for landlords to protect their investment. Landlord insurance provides property owners the financial peace of mind they need for renting out their properties.
Here is a simple guide to understanding insurance options for rental properties.
Do I need landlord insurance?
Much like homeowners insurance, landlord insurance isn’t a legal requirement. However, many mortgage lenders require landlords to get insurance for their rentals if seeking financing.
Understand your landlord coverage options
Landlord insurance offers similar coverages to homeowners insurance. Primarily, a landlord insurance policy will cover structural damage to the property. However, it will also cover loss of rent income if repairs cause the renter to move.
What's not covered by landlord insurance?
Landlord insurance doesn’t cover everyday damage from wear and tear. It also may exclude damage from certain perils, like earthquakes or floods.
Your rental property
The current state of your rental property can affect the cost of landlord insurance policies. This includes factors like the age of the property, location, size, amount of rental units within the property and the presence of on-site security.
For insurance providers, there is a higher level of liability when a property is being rented out to somebody other than the owner. This can make insurance pricey. However, having a policy specifically for your rental property can save you money in the future.
Speaking with an insurance lender can help you find the right policy to protect your best interests.