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Why Do Landlords Need Property Insurance?

Posted January 05, 2022 in Property Insurance

3 Minute Read: 

Being a landlord can be a great way to earn extra income from an investment property or rental home. Just as owning a home is no guarantee you’ll never have to deal with a home repair, owning investment property means you may have to shell out some cash for costly repairs.

Two bags of money on a see-saw scale next to a house cut-out.

One of the most important parts of being a landlord is protecting yourself financially by carrying a quality insurance policy. 

Learn more about what that means and why it’s so important to have quality insurance in place before any problems arise.

Get started with a quote from Gallant Risk & Insurance Services. We’re here to answer any questions you may have, and our friendly agents will take the time to learn what matters to you. You’ll never be rushed or pressured — call us today at (951) 368-0700 or fill out our online form.

What Is Property Insurance?

Property insurance is a form of coverage that protects the landlord and their property (landlord’s property). It provides coverage for damage to the structure, such as a fire or storm, as well as coverage for the personal items on the property, such as furniture and appliances.

Property insurance is ideal when the landlord does not live in the property they are renting out. It will cover damage to the property and assets (stored on the property) used for property upkeep, such as lawnmowers, snowblowers, gardening tools, or pool maintenance equipment.

Property insurance will also cover any liability claims against the landlord by someone who may have been injured by an unsafe condition in or around your rental property.

Will Homeowner’s Insurance Protect Me Better?

A homeowner’s insurance policy can be an important part of investing in property. It covers your personal property and protects you financially in the event of a disaster. 

Homeowner’s insurance is designed to cover an owner-occupied dwelling, whereas a landlord insurance policy is designed to cover a tenant-occupied dwelling.

However, please note that homeowner’s policies may vary by state and insurance provider, so it’s important to understand what is covered before you make a purchase.

Is Landlord Insurance More Expensive Compared to Homeowners Insurance?

This depends on the coverage. Landlord policies usually do not cover as much personal property and other items. Because of this, the premium is often slightly less.

However, according to the Insurance Information Institute, landlord insurance can cost slightly more compared to a standard homeowners policy for the same property. But again, this depends on the extent of coverage.

In most cases, insurance companies experience larger claims for an owner-occupied property compared to a tenant-occupied rental property.

Which Extra Landlord Coverages Should I Consider?

The first step in choosing a landlord policy is to figure out what is included in your current policy and make sure that you are getting the best coverage for your dollar. Since policies vary quite a bit, this can be difficult.

The next step is to assess whether your policy provides all the protection that you need; and, if not, which additional coverages may be appropriate for you.

There are additional optional coverages that you may want to consider, including:

  • Building codes – This coverage can help with alterations and repairs that your city’s building code requires after something has been damaged by a fire, windstorm, or other cause of destruction. Your landlord policy may cover this to some extent, but having additional coverage can help shield you from costs if there are any discrepancies in your landlord policy’s wording.

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