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Posted by Hannah Lapin ● Oct 4, 2018 9:00:00 AM

Landlord Insurance: The Ultimate Guide

Everything About Landlord Insurance

Homeowners insurance typically covers owner-occupied single-family residences, which means if your home is occupied by tenants, you are not covered. For properties rented out on a long-term basis, landlord insurance is essential. We’ve compiled some of our best resources on everything you need to know about Landlord Insurance.

1. The Basics

2. Types of Landlord Policies

3. Umbrella Policies

4. Renters Insurance

5. Landlord Insurance Pitfalls

6. Additional Resources

 Ultimate Guide to Landlord Insurance

Click to Download Landlord Insurance: The Ultimate Guide

 

The Basics:

Landlord Insurance policies are often 20-30% more expensive than homeowners insurance policies, yet they include the necessary liability protection landlords need. As a landlord, you have an increased responsibility for injuries on the property, so you need that extra layer of liability protection.

Most landlord insurance policies include:

  • Property Protection: Covers damage to property structures such as rental property, garage fences, etc.
  • Liability Protection: Covers medical bills or legal expenses if someone is injured on your rental property

Most landlord insurance policies DO NOT include:

  • Tenant Belongings
  • Maintenance and Repairs

To learn more, see our blog post What to Expect in a Landlord Insurance Policy

 

 

Types of Landlord Policies:

While landlord insurance policies vary by provider, there are typically three levels of dwelling policies you’ll encounter: DP-1, DP-2, and DP-3.

DP-1:

  • Most basic policy
  • Only covers Actual Cash Value of the property (Replacement cost minus depreciation)
  • Only covers specific perils named in the policy

DP-2:

  • Broader policy
  • Covers Replacement Cost of the property
  • Only covers specific perils named in the policy, and has more perils listed than a DP-1 policy
  • Sometimes includes Loss of Rent Coverage (if you can’t rent out your property due to a fire, flood, or damage by tenant, your lost rental income will be covered)

DP-3

  • Highest level of coverage
  • Covers ALL perils except for a small list of exclusions listed in the policy
  • Includes Loss of Rent Coverage (if you can’t rent out your property due to a fire, flood, or damage by tenant, your lost rental income will be covered)
  • Visio Lending always recommends DP-3 Policies for optimal coverage

To learn more, see our blog post Why DP-3 Policies Offer the Best Coverage

 

 

Umbrella Policies:

An umbrella policy is a policy that offers liability protection beyond your standard dwelling policy. The simplest policies start at an extra $1 million in coverage, which can be extremely helpful in the unlikely scenario of an expensive lawsuit.

In addition to the added financial protection, umbrella policies offer an extra layer of claims coverage that are generally excluded from standard policies including libel (written false statement damaging to a person’s reputation- watch out for social media!), slander (spoken false statement damaging to a person’s reputation), and mental anguish (a high degree of emotional pain, distress, or suffering that is a direct result of a traumatic event). Plus, umbrella policies cover personal circumstances outside of your rental properties, such as your dog biting someone at the park.

To learn more, see our blog post Understanding Umbrella Policies 

 

 

Renters Insurance:

Landlord Insurance does NOT cover tenants’ belongings. It is crucial that your tenants have Renters Insurance to cover:

  • The tenants’ personal property: in cases of robbery, fire, storm etc.,
  • Liability coverage: in cases of a baseball through a neighbor’s window or overflowing bathtub
  • Loss of use coverage for the tenant: temporary housing in cases where the dwelling is no longer habitable

Renters Insurance is luckily incredibly affordable.

To learn more, see our blog post Why Renters Insurance Matters to Landlords

 

 

Landlord Insurance Pitfalls:

At Visio Lending, we have been helping landlords grow their rental portfolios for years. Here are some of the common pitfalls we have seen landlords encounter:

  • Water damage often has the most exclusions.
  • Vacant properties are usually NOT covered
  • IF you act as your own contractor for the property, your liability coverage will not apply.

To learn more, see our blog post 3 Common Landlord Insurance Pitfalls

 

 

Additional Resources:

Here are some of our favorite resources on landlord insurance:

Landlord Insurance: Costs, Providers, & What to Avoid by FitSmallBusiness

The Ultimate Guide to Renters Insurance by Landlordology

A Quick Guide to Landlord Insurance by Investopedia

 

 Download Landlord Insurance: The Ultimate Guide

Related: Mortgage Protection, Save on Flood Insurance with Ameriflood Solutions, Inc

Topics: Landlording, Property Management, Insurance