Landlord Insurance

Check out how a landlord insurance policy can protect your rental property and yourself from any potential litigation.

WRITTEN BY
Caitlin Wood
Updated November 26, 2020

You may have a home insurance policy to cover your primary residence, but what if you own a rental property? Do you require a policy as a landlord?

Landlord insurance offers you protection if the property is ever damaged or if your tenants get injured. That said, different policies offer different types of coverage, and the right policy for you depends on a variety of factors. 

Let’s take a closer look at landlord insurance to help you determine what type of coverage best fits your unique needs. 

What is Landlord Insurance? 

Landlord insurance is a type of insurance policy that covers the owner of a home, condo, or other types of real estate from financial losses associated with damage to rental properties from things like theft, vandalism, fire, natural disasters, and so forth. 

These insurance policies cover the structure of the property, and any loss of income from rent may also be covered if the property becomes uninhabitable as a result of the circumstances that have occurred.

How Does Landlord Insurance Work?

If you own a rental property, a landlord insurance policy can protect you from both damages to the property and liability claims. For example, if your property is damaged by a fire, your landlord insurance policy can help pay for any repairs required. 

Or, if someone is hurt on the property or their belongings are damaged as a result of your negligence, you may also be covered against any potential litigation.

Sometimes landlord insurance may cover tenant damage, but not always. You would have to ask your insurance agent whether this is included or if you have to add coverage for tenant damage.

It’s also important to note that before the policy kicks in and compensation is provided, you will first have to pay a deductible. 

What is Covered by Landlord Insurance?

Landlord insurance provides protection in three important areas as shown in the table below: 

Property Damage Landlord insurance covers damage to the structure of the property, including repairs required after damage from a fire, lightning, hail, or windstorm.
Loss of Rental IncomeIf you are not collecting rent because the property is uninhabitable as a result of renovation or damage, you may be covered for the rental income you otherwise would have been collecting. 
LiabilityIf you are ever sued because of negligence on your part that caused injury to someone on the property or damage to their possessions, your landlord insurance policy will cover you for legal costs. 

What is Not Covered by Landlord Insurance?

The following items are typically not covered in a traditional landlord insurance policy:

  • Flood
  • Tenant damage
  • Legal costs of non-injury legal claims such as wrongful eviction
  • Loss of income from eviction or non-paying tenant
  • Damage from your intentional acts
  • Unsanitary housekeeping by your tenants
  • Wear and tear
  • Repairs made by your tenant with your consent
  • Damage from insects and pests

If any of the above are required, an additional rider may need to be purchased. Further, landlord insurance does not cover personal liability protection for your tenants or their own belongings. As such, landlords are encouraged to require that tenants buy their own tenant insurance policy prior to signing off on a lease. 

Additional Coverage Options

If there are things that you would like to be covered for that are not included in a standard policy, you may add these options as riders:

  • Flood coverage. If the property is damaged as a result of a flood, this policy will provide compensation to pay for repairs. 
  • Vandalism coverage. If your property is damaged as a result of vandalism — either by the tenant or someone else — this policy can help cover the cost of repairs.
  • Theft coverage. If something on the property is stolen, such as maintenance equipment, this policy can reimburse you.
  • Income insurance. If your tenant does not pay you their rent, this policy will cover lost income.
  • Pet liability coverage. If your tenant’s pet causes damage to the property, this policy will cover legal costs if it bites someone or damages another person’s property.  

Is Landlord Insurance Mandatory?

There is no legal requirement for landlords to have landlord insurance on their rental properties. However, lenders will usually require that a policy is in place before a mortgage is issued. As such, landlords will typically need to take out a policy when purchasing an investment property and taking out a mortgage to finance it. 

How Much Does Landlord Insurance Cost?

The cost of landlord insurance can range quite a bit depending on various factors. That said, this type of policy averages around $900 per year for a home and about $400 per year for a condo. It’s usually more expensive than traditional home insurance.

The exact cost of a landlord insurance policy will be based on the following factors: 

  • Property type. A smaller home will cost less in landlord insurance than a larger home. 
  • Property location. A property located in an area of higher crime or where natural disasters (like earthquakes or forest fires) are more likely will cost more for a policy. 
  • Value of the property. A property that is valued higher will cost more to repair or replace, and as such, the landlord insurance policy will cost more too.
  • Age of the property. The older the home and the poorer its condition, the higher the cost of insurance. 
  • Security. If the property is secured with an alarm system or other components that deter burglars, the cost for insurance may be lower. 
  • Your claims history. If you have a track record of filing claims, your premiums may be higher. 

Frequently Asked Questions

Is Damage From Pets Covered?

If your tenant has a pet who lives on the premises and it causes damage to the property, your landlord insurance policy will not cover repairs. 

Can Landlord Insurance Be Deducted From Income Taxes?

Yes, landlord insurance premiums are typically qualified for tax deductions.

Final Thoughts

Having a landlord insurance policy in place for your rental property can protect your investment and yourself from any potential litigation. It also gives you peace of mind knowing that you won’t be stuck in a financial predicament should anything happen to your property, and can afford you with tax-deductible benefits come tax time.