Sometimes you plan on being a landlord as a business venture and other times it just happens. Maybe you inherited a property or you only decided to rent your home because you couldn’t sell it, but whether or not you make a living from rental income, you need landlord insurance. Here’s why it’s important.
1. It Protects Your Property
The most obvious benefit of landlord insurance is that it protects your rental and any additional structures on the property, like sheds or garages. This aspect of landlord insurance is very much like a homeowners insurance policy, covering damage from wind, fire, and vandalism. If your rental is furnished or you store other personal property onsite, this is also covered by your landlord insurance policy.
2. It Offers Liability Coverage
Here’s where landlord insurance begins to differ from standard homeowners insurance. As a landlord, you’re running a business and, as with any business, there are risks involved. One such risk for landlords is the possibility that your tenant could be injured on the property due to negligence or oversight on your part. Should they decide to sue, you or your business would be responsible for any settlement or award, but landlord insurance will cover these costs, plus any legal fees, up to your policy limit.
3. It’s Not the Same as Homeowners Insurance
Although it’s not advisable, let’s say you’re only renting temporarily and you want to forego the cost of landlord insurance. Can’t you just continue to use your homeowners insurance policy instead and take the risk on liability should there be any tenant issues?
The answer is no—landlord insurance and homeowners insurance may both protect your property, but they are different types of insurance. Homeowners insurance only offers protection to owner-occupied properties. As soon as you rent your home to someone else, your policy no longer provides you with protection. This is why landlord insurance is needed—without it, you have no protection at all, which can be devastating if your property suffers damage that results in a total loss.
4. Renters Insurance Is Not the Same as Landlord Insurance Either
You may think that if your renters have their own insurance policies, you’re covered, but this isn’t entirely true. For the best possible protection, you should have landlord insurance and your renter should have renters insurance.
If your renter causes a significant amount of damage to their unit due to negligence and they have renters insurance, it only covers up to their policy limit. While you could attempt to collect the balance, if they can’t pay it, you’ll end up having to foot the bill unless you have landlord insurance to kick in and cover the difference.
Of course, the primary benefit for tenants when it comes to renters insurance is that it covers their personal possessions—your landlord insurance won’t, so it’s a good idea to emphasize the importance of renters insurance to your tenants.
5. It Can Cover Loss of Rent
One additional option that can be added on to your landlord insurance policy is coverage for loss of rents. If your property is damaged because of a covered event like fire and it cannot be occupied due to this damage, loss of rent coverage protects you against the loss of rental income.
Learn More About Why You Need Landlord Insurance
If you’re looking for landlord insurance in California and you’d like to learn more, contact us today at 1-800-644-6443 to discuss how Insurance by Castle can help provide you the protection you need.