What is Landlord Insurance and What Are the Benefits?
A landlord is an individual who owns an apartment building, a home, a commercial building, or land and rents the property out to others. But what happens if the property is damaged, if a tenant files a claim, or if a tenant has not paid his or her rent, for examples? Landlord insurance provides coverage for landlords offering financial compensation.
How Does the Insurance Work?
This kind of insurance has rates that vary due to the circumstances of the property, and the coverage is not required but is highly recommended. A landlord would purchase the tax-deductible insurance from a licensed insurance agent before a property is rented out. Once the coverage is in place, the landlord would pay the premiums to keep the policy active.
What Are The Different Types of Landlord Insurance Coverage?
1. Property Damage
Property owned by a landlord could be damaged due to severe weather, fire, vandalism, break-in, tenant damage, and more. The property damage component of the insurance will cover all or most of the entire cost of the rental property.
2. Loss of Income
This component of the insurance will cover the loss of income. An example would be an apartment building with units that have become uninhabitable due to circumstances outside of the control of the landlord.
3. Liability Insurance
This component of the insurance protects a landlord from lawsuits and liability claims. For example, if a tenant is injured on the sidewalk of a landlord’s apartment building and that tenant sues for a slip and fall case, liability insurance will help cover the legal costs associated with the claim. Not only can legal fees be included, but expenses such as medical payments and funeral costs can be covered.
4. Other Options
Although property damage, loss of income and liability insurance are essential parts of the coverage, there are other options as well. For example, a landlord can purchase natural disaster insurance, rent guarantee insurance, and more.