When You Need Landlord Insurance

As a landlord, you have a business renting out your property to tenants. Every business has risks of loss. In the case of a rental property, the risks include the property potentially experiencing a fire or water loss. There is also the risk of liability that can lead to costly claims. Landlord insurance will provide you with the protection needed to deal with these losses. 

The best way to get landlord insurance is through Obie. Obie shops your insurance coverage to many insurance companies, getting you the best possible rate. It’s available in all 50 states.

Is Landlord Insurance Mandatory

Landlord insurance is not a requirement. No city or state laws require that you get insurance to mitigate your risks. If you have a loss without insurance, you must pay for that loss out of pocket which can be very expensive. The one instance where you might be required to carry landlord insurance is when there is a mortgage on the property. The lender might require landlord insurance to protect his financial interest in the property. 

When Landlords Should Get Rental Property Insurance

Landlords should get insurance to protect against the what ifs that can happen with a property. Common situations where a landlord should get insurance include when: 

• There is a concern about third-party liability claims
• The property is in a bad neighborhood and a target for vandals and burglars
• You have business property on site that may be damaged or stolen
• It would be a financial hardship not to get rent paid in the event of a major loss

Homeowners Insurance Coverage for Landlords

Landlord insurance protects landlords from many potential losses. Different coverages from the policy may kick in depending on the type of incident that occurs. The first area of coverage has to do with the property your own. 

Dwelling

The dwelling coverage is the coverage provided for the actual structure and building of the home rented. The insurance carrier will generate a rebuilding cost for the home based on its size and construction type. This is the coverage limit for the dwelling that may have addons for building and ordinance changes. If the structure has a fire, water damage, or vandalism, the dwelling coverage kicks in. 

Other Structures

If your rental has other structures on the property, this coverage protects them in the event they are damaged by fire, windstorm, or other loss. Other structures include gazebos, pool houses, and fences. For example, if a tree falls on and damages the fence, other structures coverage kicks in to repair the fence. 

Personal Property

Some rentals come furnished, while others come unfurnished. Personal property coverage protects landlords from losing their property in the unit. Even unfurnished properties may have appliances that qualify as personal property that should have some coverage. Many landlords with unfurnished properties limit the personal property coverage to $5,000 to $10,000.

Liability

Liability coverage is financial protection from losses where a third-party claims you are responsible for their loss. For example, someone may lead on the railings on a patio deck that gives out because of poor construction. If that person fell and got hurt, they could sue the property owner for the injury. This could be tens of thousands, if not hundreds of thousands of dollars or more in damages, depending on the injury.

Loss of Rents

Loss of rents protects landlords if the property is uninhabitable while it is being repaired for a covered claim. The insurance company pays the lost rent so that the landlord is not out of the revenues during the loss. This is to prevent a financial hardship on landlords during claims. For example, if the landlord was getting $2,000 per month in rent and there was a fire, the insurance would pay $2,000 per month until the property was restored to rental condition. 

How Landlord Insurance Protects Rental Property

Landlord insurance protects the financial interest in a rented property. The property's policy is underwritten based on size, age, style, and location. This means that a landlord policy is specific to the property it insures and is designed to protect things as a business interest. This last part is critical since a homeowners policy will protect a home you own in the same way as landlord insurance. However, once you rent the property out, it is considered a business asset, negating personal homeowners insurance. It is the landlord policy designation that means the policy protects a rental. 

How Landlord Insurance Protects Tenants

Landlord insurance is not intended to protect tenants. Each tenant should have their own renters' insurance policy that protects their belongings and their personal liability. Tenants may have liability with a dog that could bite a neighbor. The renters' policy would also have loss of use that pays the renter to get another property if the rental is out of commission during a covered claim. 

Pros and Cons of Landlord Insurance

The pros of landlord insurance include:

• Will rebuild the structure in the event of a total loss
• Protects business property left on site
• Takes the liability away from landlords

The cons of landlord insurance included:

• More expensive than homeowners insurance
• Liability claims can be confusing if you think the tenant should be responsible for the loss
• Often undervalue the amount of business property left on site

Best Landlord Insurance Providers

When looking for landlord insurance, look at some of our favorite companies to choose from. 

Obie

Obie is a national provider of landlord insurance. It is a brokerage, which means it shops among its preferred providers for the best-priced policy to cover your needs. We like Obie’s process for getting a quote which takes just a few minutes to walk through the prompts and tailor a policy for your property. 

State Farm

State Farm is one of the largest insurance carriers in the country. It provides landlord insurance in all 50 states through its network of 19,000 agents. Each agent is an agency owner that knows his community and the risks associated with the community, such as storms or crime. This means that State Farm agents can work with landlords to make sure that they get the coverage needed for their property based on known risks. 

Allstate

Not every landlord rents the entire property out to a tenant. For landlords who rent out a portion of their own homes, Allstate is an excellent carrier to shop with. They have a homeowners insurance endorsement for rentals. This is a cost-effective way to get a policy that covers the home for less than what traditional landlord insurance will cost. 

Nationwide

Nationwide is a popular national insurance carrier for traditional homeowners insurance. They also have a comprehensive policy for landlords. We like Nationwide for their bundling policy options that help landlords save money when they also have autos insured with the carrier. 

Takeaway

If you own a rental property, landlord insurance is a must. It protects you from the potential losses and liabilities of owning a property. When shopping for a landlord policy, consider Obie, an insurance company specializing in landlord insurance.