NYC Insurance Blog

What Does Landlord Insurance Cover?

Landlord insurance covers any risks related to rental activity and buy to let property. Normally, most insurance policies start with property owner's liability insurance and building insurance. However, property owners can add more covers such as accidental damage, tenant default, and loss of rental income.

Rental properties are riskier to insure, and additional coverage makes landlord insurance coverage costlier, i.e., about 25% more of the homeowner's insurance. Property owners should invest in landlord insurance cover to get compensated in case of damages. 

What insurance coverage do you need as a landlord?

Typically, the type of insurance policy each homeowner needs depends on several factors, including the insurance provider, frequency, and the length you rent the property. However, here are some of the insurance coverages you may need:

1. Long-term renter is also known as a rental dwelling policy; a long-term renter is insurance coverage designed to protect landlords from losses related to leasing a property. If you rent out your house or apartment for at least six months, you need a long-term insurance policy. 
2. Occasional short-term renter – if you rent out your primary residence occasionally for short periods, a homeowners insurance policy can protect you. However, it is advisable to notify your insurance agent to confirm the coverage. Sometimes, you may have to pay a rider when you have rented out your home occasionally. Remember, talking to your insurance broker helps you understand the best course of action depending on the situation at hand. Let our brokers help you find the right coverage!
3. Frequent short-term renter – if you rent out your primary residence for short periods frequently, frequent short-term renter coverage is recommended. Such primary residences, for example, Airbnb, are considered as businesses by insurance companies. Therefore, their owners must purchase commercial insurance coverage.
   

What does landlord insurance cover?

Here are the three types of losses landlord insurances cover:

1. Loss of rental income – if you cannot rent out your home due to damages (from covered events), your insurance company can compensate you for the lost rental income. Remember to inquire from your insurance agent whether loss of rental income is included in your coverage. Our office is here to help you decide which coverage is better, Click Here!
2. Liability – Liability coverage protects you if someone is injured on your property. For example, if a tenant slips and falls and sustains injury in your property, the insurance company will settle and compensate the tenant. However, if a tenant's guest slips and injures himself, the tenant's renters insurance covers damages incurred. 
3. Property damage – if your home is damaged by covered risks such as snow, fire, hail, and wind, the insurer covers the damage. Sometimes, landlord insurance can cover personal properties, for example, television, furniture, and kitchen appliances. 

Depending on your insurance company, you can add other forms of coverage as endorsements or in your core policy. Some of the riders you can add include the following:

1. Non occupied dwelling endorsement – if your property is not occupied for more than a month (30 days), you can get compensated for such period if you have a non-occupied dwelling endorsement. 
2. Building code coverage – this type of coverage covers the additional cost of renovating your home to meet current building codes. Imagine your area's building codes have changed since building your home; it is damaged and requires to be repaired. To meet the current codes, you will have to incur extra costs. This is where this insurance coverage kicks in to cover these additional costs. 
3. Heating/air conditioning loss coverage or reimbursement – this coverage reimburses you for the payments you make to your tenants when the HVAC breaks down mechanically.

What you need to know about landlord and renters insurance policies.

Landlord insurance policy may protect the personal property you leave in the rental unit (for your tenants), but it does not cover the tenant's property. Ergo, to insure your belongings and the damages they may cause, it is prudent to tell your tenants to take a renters insurance policy while signing the lease. Include an indemnity clause in your lease to protect you (the landlord) from damages or injuries in your property.

Are there other insurance policies I should invest in as a landlord?

You can check these out:

1. Personal umbrella policy – this policy is ideal for property owners who have multiple properties. If your property is destroyed and related costs exceed your landlord insurance policy, a personal umbrella policy can cover the losses.
2. Flood insurance – most insurance companies avoid offering flood insurance because it is a high-risk event. It is upon the property owner to assess his situation and determine whether to take the coverage or not.
3. Earthquake insurance – if your area is prone to earthquakes, ensure you have earthquake insurance coverage to avoid possible losses or damages. 

Finally, you can consult a financial advisor to determine better ways of shielding yourself from lawsuits or losses. For example, creating a limited liability corporation (LLC) can limit exposing your personal assets when sued for damages that occurred in your property. At NYC Business Group, we can offer competitive rates, as well as financial advice, contact our office today to speak with one of our Agents.

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