5 Important Things You Need to Know About Landlord’s Insurance

Becoming a landlord is a great way to make a passive income nowadays. Whether you have an entire condo to rent out or just a single room in your home, you can still manage to make quite a bit of supplemental income if you have a property in a good area of town. However, being a landlord isn’t as simple as just putting your room advert up. One of the most important things you need to get is landlord’s insurance. Let’s take a closer look at this type of insurance and why it is so important that you get it.

What is Landlord’s Insurance?

You may have heard of policies like homeowners’ insurance before, so you might be familiar with insurance anyway. However, landlord’s insurance is something a little bit difficult. This article by Lemonade defines landlord insurance as “a policy that covers property owners renting out their homes, condos, or apartments”. This is a pretty straightforward definition but we can still expand on it a little more. Here are some of the things you need to know about landlord’s insurance if you want to rent out your home or a second property.

Homeowners’ Insurance Won’t Cover You

If you have homeowners’ insurance then you might think that you are perfectly covered when it comes to insurance. However, this policy usually only applies to those owners who are occupying the property. Renting is not the same as owning so any tenants are not going to be covered in the same way.

Renters insurance is an affordable option which can help to give them some of the coverage you have through homeowner’s insurance. While it is not a mandatory requirement (in fact, only 41% of renters bother to take out the policy) to have renter’s insurance, you can make it clear that you expect any potential tenant to take out a policy.

Damage is Covered

Both property damage and dwelling coverage are covered through the landlord’s insurance so if you need to make any repairs to your property while you have someone living there you know that it will be covered by insurance. Likewise, you will know that if your tenants cause any damage to the furniture or fittings you put in the property, you will be able to replace them.

But Not All Damage

Whilst commonly occurring damage can be covered by your landlord’s insurance, there are still some things that won’t be. Earthquake damage, floods, and other natural disasters might not appear on the basic policy. However, there are many reputable insurance companies out there who will offer you add-on policies if you live somewhere like California where earthquakes might be fairly common. If there is an issue which you think has a strong chance of affecting your property, you should see if there is a policy out there which you can use to protect yourself.

You are Liable for Maintenance

Are you providing appliances like a dishwasher or a washing machine as part of your property? If they break down, it is entirely on you to get them fixed. You are most likely going to have to pay out of your own pocket to get them fixed. Many people expect to find these kinds of appliances when they move into a new place so you might need to provide them to able to attract tenants. However, you need to be aware that you will need to be the one to fix them should something happen.

You are Protected for Other Liability Claims

Trying to decide who is liable for an accident can be a legal nightmare. Landlord’s insurance usually has some sort of liability policy built into it. This means that you will be protected against potential lawsuits and other liability claims. You could be able to cover the cost of any medical bills and legal fees sent your way, so make sure that that liability protection is a comprehensive part of any policy you take out.

Finding the right landlord’s insurance for your needs can take time but it is extremely important. You need to ensure that you are protecting yourself and your property from anything that might come your way. Owning property demonstrates some serious financial commitment so you need to ensure that nothing is going to harm this investment. If you want to maintain the financial freedom you get through owning property, you need to put the work in to make sure that you are able to protect yourself. Don’t delay, take a look into landlord insurance policies now.