In 2018, the average residential property insurance claim landed at around $15,000. For many property owners, having to pay that amount out of pocket would likely cause some serious financial strain.
When we think about home insurance, we often think of homeowners insurance. What about rental properties? Should you take out an insurance policy for the properties you don’t live in?
The answer is yes. We’re here to explain why rental property insurance coverage falls on you, rather than your tenants.
Read on to understand more about the what and why of rental property insurance for landlords.
What Is Rental Property Insurance?
First, let’s talk about what rental property insurance (aka landlord insurance) actually is. It’s important that you don’t confuse rental property insurance with a) homeowner’s insurance or b) renter’s insurance.
Homeowner’s insurance typically only covers property damage if the policy owner lives in the covered home. Renter’s insurance covers any belongings owned by the renter, but not the property that they rent.
Rental property insurance is designed to protect the owner of a rental property from potential financial strain. Property damage and other liabilities can add up.
Why Do Landlords Need Property Insurance for Rentals?
Why do you need an insurance policy that covers your rental properties? What, specifically, does this type of insurance cover?
First, your landlord insurance policy will cover most forms of damage done to your rental properties. This can include fire damage, vandalism, and some types of water or wind damage, amongst other things. Depending on the type of policy you purchase, this should cover damage done not only to the residence but any other permanent structures on site (like sheds or garages).
Second, most landlord insurance policies will also cover liabilities. If a tenant becomes injured on your property, it is possible that you will be held responsible for their medical bills. Liability insurance will take care of this for you, so that you’re not paying out of pocket.
How Can You Select the Right Coverage?
Different types of properties and rental agreements warrant different types of coverage. For example, if you only rent out a single room of your permanent residence, you may not need rental property insurance at all. If you own a multi-family unit versus a single-family unit, you will need a larger and more extensive policy.
Head to Property Insurance HQ to find the perfect insurance policy for your rental property.
Don’t Go Bankrupt Over Rental Property Issues
Rental property insurance is crucial for most landlords. Without it, damage to your property or personal injuries that occur on your property could cause financial strain. Don’t go bankrupt over issues with your rental property; get rental property insurance, instead.
Investing in real estate is no small task. If you’re getting ready to purchase rental properties or expand your property ownership, take a look at our real estate content. We’re here to help you navigate rental laws, rental marketing, tenant retention, and more.