Understanding the Differences Between Homeowner And Landlord Insurance.
Renting out a property can always be a gamble, with the risk of a bad tenant who could, for example, smash a hole in the wall or bail on paying rent. In either case, the landlord is left financially liable.
But could landlord insurance help investors better protect their property investments?
“Landlord coverage is a vital add-on for anyone planning to rent some or all of a property to another party,” insists James J. Whittle, assistant general counsel and chief claims counsel for the American Insurance Association.
Landlord insurance coverage varies based on location, but in general, it will protect the house, apartment, or condo that is being rented out against “covered perils.” That usually consists of severe weather, natural disasters, and vandalism. It also might cover the owner if someone is injured at the property, like if the tenant trips on the entry stairs and then tries to sue the landlord.
Some landlord insurance policies also provide income coverage protection. For instance, if the property becomes unlivable due to an event like a fire, the landlord would be paid the fair market value for rent while the house is being repaired. Some policies also offer rent default coverage. So if a tenant doesn’t pay the rent on time, the landlord would receive out-of-pocket money and assistance with legal fees.
Homeowner insurance policies don’t always cover renting property, particularly if the property is being rented on an ongoing basis. “Your home insurer has chosen to insure you, but they don’t know anything about that third party,” says Whittle.
Landlord insurance will cost about 25 percent more than it would for homeowner insurance for a basic policy. Rates vary drastically depending on location and coverage limits. But landlord insurance can be deducted on a tax return as a business expense.
