So what does a landlord insurance policy cover?
Property Damage: This policy should cover the replacement costs for your building or your personal property should they be damages due to severe weather, fire, theft, and even tenant damage.
Loss of Rental Income: Landlord Insurance can protect you from the financial loss you would sustain if your rental property becomes uninhabitable due to a covered loss. When your tenants are forced to vacate your property, your insurance policy can step in and pay you the lost rental income that your former tenants are no longer paying.
Liability Insurance: As a landlord, this is arguably your most important coverage. Liability insurance protects you in the event that you are sued by a tenant, a guest of a tenant, or even a trespasser for bodily injury. This coverage will not only pay for your legal fees, but they will also pay the settlement, if there is one (up to the policy limits). The second part to liability insurance is coverage in the event that you are deemed to have been at fault in causing some sort of property damage. A classic claim example here would be a leaking water pipe damaging your tenants furniture or artwork.
Additional Coverage’s: There is a wide array of coverage that are available to you as a landlord such as medical payments coverage, business personal property coverage, flood insurance and earthquake insurance to further insulate yourself from a claim.
Why should you have landlord insurance?
As a landlord, you have set up an income stream that is important to protect. Whether you have created an LLC or you own your properties in your personal name, our goal is to ensure that you have the coverage to ensure that your income stream is protected from an unexpected event. We typically recommend that you have no less than $1,000,000 of liability insurance to protect yourself in the event of a lawsuit and also that you insure your building and personal property for the full replacement cost. This means that we will not depreciate the value of your property due to wear and tear over time.
In many instances, we see landlords relying on a homeowners insurance policy to cover their rental property. It is extremely important to be aware of the fact that a homeowners policy is only intended to cover your primary residence and will likely deny coverage if you do not live in the home. The only time that a homeowners policy is an acceptable form of coverage for a rental property is if you live in the home and rent out a room or apartments within the home (even so, the homeowners insurance carrier will want to account for this fact on the policy). Otherwise, it is critical that you review your policy and make the appropriate changes.
Landlord Insurance Tips
We are often asked if landlord insurance is tax deductible, and it is. You can deduct the premiums that you pay on your property because being a landlord is a business endeavor.
You can require in your lease that your tenants have renters insurance. This helps protect you, the landlord, by having an additional layer of coverage in the event that someone is hurt in one of your tenants apartments.
Here at the Smith Insurance Agency, we have been providing Landlord Insurance in Rochester since 1966. We insure hundreds of landlords and can provide you with the knowledge and coverage options to help you make the best possible decision for protecting your rental property. Please call or email us today to get started on properly, and cost effectively, insuring your rental property!