What Is Landlord Insurance?

Renters Insurance Basics

Most people would be amazed at the number of things that can happen to a property and a landlord owner that could make them financially or legally liable for damages. If a storm rips the property apart, who is going to pay for the repairs? If a tree gets rot and falls over crushing a tenant’s car, who will pay for the repairs? If a child is playing on the community playground and gets injured, who covers that damage? If a tenant accidentally starts a fire that rips through their apartment and the apartments of the neighbors, the items in the apartment may be covered by the renters insurance policies of the tenants, but who pays to repair the structural damage of the building? For all these reasons and dozens more, landlords are wise to take out a good landlord insurance policy to protect themselves and their investment.

Protection for Building Owners

Landlord insurance provides protection for the property owner if he or she rents out the property to tenants. The insurance typically will protect against:

• Damage from various storm phenomenon such as lightning
• Liability in lawsuits for injuries that occur on the property
• Repairs for damage done by tenants

Landlord insurance comes in one of two forms, either landlord rental dwelling insurance that covers the various structures on the property or Landlord Rental Condominium insurance, which is for those who own a condominium and rent it out to others. The second insurance type is important for those who sublet their condos in order to protect the structure, since there is likely no landlord over a group of condos who will be carrying insurance to do that.

Replacement Types

Landlord insurance usually has one of two methods for handling any losses that actually occur on the property: replacement value insurance and actual cash value. Replacement value insurance usually costs more because it means that the insurance company will pay to repair or replace damaged property without any regard for depreciation. On the other hand, actual cash value settlements only offer compensation that takes into account depreciation of the damaged property since it was purchased. While this is less expensive, it can often leave a landlord strapped for cash after an emergency since the amount paid by the insurance policy may be not enough to cover the costs of rebuilding the damaged building or structure. The premium amount set for landlord insurance is dependent on many factors, primarily the size of the property to be insured and the number of tenants who will be renting out the property.

Since landlord insurance only covers the property and the liability of the landlord, tenants are very much encouraged to get their own renters insurance policy which will protect them and their belongings in a similar fashion. Renters insurance can also provide the tenant with protection from liability if their actions cause deliberate damage to the property and the landlord’s insurance policy seeks to subjugate their losses in the claim by going after the responsible tenant.