Does any of the following apply to your situation?

● You plan to convert your primary residence into a rental property

● You are buying an investment property to create a rental

Both of these cases call for landlord insurance. Your regular homeowner's insurance has no use when you are dealing with rental properties. The only way to financially protect yourself is to get landlord insurance.

In the following sections, we'll go over the main coverage areas of landlord insurance. You'll learn about the responsibilities of landlords and tenants tied to the correct use of this insurance policy.

Why is landlord insurance beneficial?

Landlord insurance is specifically created for landlords. The use of rental units differs from regular residential properties. That's why the normal homeowner's insurance designated for owner-occupied dwellings fails to cover investment properties.

There have been cases of landlords having a tenant move in without getting proper insurance. They didn't have time to reflect on the insurance option because the first damage was done in the early days of tenancy.

As a result, the landlords didn't receive any coverage and had to pay out of their own pockets.

When you are converting a prior residence into a rental unit, obtaining a new policy is your only way to ensure financial protection. The whole procedure of getting one is usually effortless.

You should call your insurance company and ask them to switch your homeowner's insurance into landlord insurance. Budget for a higher monthly or annual fee, though. Landlord insurance could be up to 25% more expensive compared to a homeowner's policy.

When you are building or buying a new rental unit, it pays to shop around for landlord insurance. The market is full of competing insurers and you might find a great deal for your investment property.

What does the landlord insurance cover?

There are two main domains of coverage that make landlord insurance valuable. These are liability coverage and property damage coverage.

● Liability coverage. Tenant injuries pose a major concern for landlords. You could be responsible for certain injuries sustained on the premises of your rental unit.

For example, any failure to warn about the risk of injury or taking inadequate measures to make the rental space habitable in terms of safety could lead to costly consequences. The liability coverage may prove to be a necessary financial safety net in times of trouble.

● Property damage coverage. This type of coverage offers financial protection for the personal property that you have left in the rental unit. Any structures on your property should receive adequate coverage as well.

Depending on your policy, the coverage could include both accidental and intentional damage caused by your tenants.

Does landlord insurance coverage tenant belongings?

Unfortunately not. Your tenants have to apply for renter's insurance. This type of policy protects their personal items. As long as your property is only tied to the landlord insurance policy, your tenant's personal belongings are left without any protection.

In some jurisdictions, it's possible for landlords to obligate their tenants to obtain renter's insurance. This could be a requirement before signing the lease agreement. As a landlord, that step allows you to protect yourself against legal disputes after your tenant's personal items are damaged.

What are the landlord insurance add-ons?

Many first-time landlords assume that their basic insurance policy covers every aspect of their investment, including damages resulting from natural disasters. However, that isn't the case.

The basic landlord insurance isn't enough to cover all the potential issues you could face in the future. Insurers have created numerous policy add-ons that raise the total price of your landlord insurance.

Here are some of the additional coverage areas:

● Rent guarantee

● Flooding or natural disaster protection

● Employer liability coverage

In a nutshell: What Does Landlord Insurance Cover?

Landlord insurance is a necessity for rental property owners. A regular homeowner's insurance won't cover the unique situation of having tenants in a rental unit.

The two main areas of concern are liabilities and the landlord's property damage. Both of these aspects should be covered by most standard landlord policies. But there are other potential add-ons you could consider, such as rent guarantee and employer liability coverage.

Keep in mind that your tenant's personal belongings are never covered by your landlord's insurance. In order for your tenants to receive protection for any personal items, they should apply for renter's insurance. Some landlords make this prerequisite for signing the rental agreement.