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Do You Need Landlord Insurance?

Landlord giving the key to a renter
If you own a home, you know the fear that comes with something terrible happening to your property. If you rent out the home, you know that anything can happen at a moment's notice. Being a landlord certainly isn't simple, and the fact that so many landlords seek out insurance speaks to that.

What Landlord Insurance Is

You might know landlord insurance as dwelling fire insurance. This insurance will cover your investment, the property, and home, rather than the possessions inside of the home. Typically, people who live in the dwelling have renters insurance to cover their own expenses.

Landlord insurance typically does not cover property you share with a tenant. For example, landlord insurance is typically not useful for individuals who rent out a room or live in the same building as the tenant.

You should discuss specific coverage with the landlord insurance company you work with. Keep in mind that different companies will have their own coverage limits and requirements.

What Landlord Insurance Covers

Often, landlord insurance covers specific perils like burglary, vandalism, lightning, falling objects, broken pipes, gas leak explosions, and damage caused by riots. One of the most popular reasons to obtain landlord insurance is to cover the cost of a fire on your property.

You can also opt to add certain types of coverage if the unit you own is occupied. If a tenant lives in the space, you might consider adding coverage for rent in case the home is deemed uninhabitable by a storm, fire, or other tragic event.

Landlord insurance may also cover your liability in some situations. If somebody is injured on your property, whether they are a tenant or a guest, they could sue you as the owner of the property. If you are sued for funeral expenses, medical bills, or pain and suffering, this coverage may protect your personal assets and property.

Liability insurance for landlords also covers property damage. For example, a landlord may neglect to repair a broken pipe. In the meantime, the tenant reports the incident and realizes mold is growing on their personal property as a result of the pipe. Your insurance may cover their property.

Dwelling insurance typically covers the home itself, but if you have other structures on the property, like sheds or detached garages, you may need additional coverage.

Finally, keep in mind that landlord insurance will not cover the costs of replacing equipment or appliances that break down, nor does it cover maintenance. For example, insurance will not cover the cost of a new refrigerator for your rental unit.

When You Need Landlord Insurance

The level of insurance you need for your property is based on several factors. The insurance company will consider the estimated replacement costs, recent appraisal values, mortgage lender's requirements, square footage, purchase price, and current insurance policies.

Some circumstances could lower the cost of your landlord insurance premiums. For example, you may end up paying more if your home or complex has a swimming pool or lacks fire sprinklers. The insurance will also consider the age and condition of the property, as certain conditions make it more likely to catch fire than others.

Ultimately, you are wise to consider landlord insurance if you rely on the income from your investment. Otherwise, you may find yourself losing money on your rental property. Additionally, you are wise to require your renters to obtain renters insurance to help cover costs.

Still have questions about landlord insurance? To learn more about your insurance options, call Sachs Walsh Insurance. We understand the needs of homeowners, business owners, and others who are trying to make the best decisions for their investments.

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