What Is Landlord Insurance? | Landlord Insurance Education

Landlords can explore additional coverage options beyond the standard to shield their properties from certain risks. These include:

• Earthquake insurance

• Umbrella policies for extra liability protection

• Short-term rental insurance

• Coverage for property under construction or renovation

Landlords in earthquake-prone areas may need to purchase separate earthquake insurance, as it is not typically covered in standard policies. Other optional riders available for landlords cover scenarios like:

Landlords can also consider emergency coverage, providing financial help for sudden, necessary property visits, while rent guarantee insurance covers lost income from tenant default. The cost of rent guarantee insurance typically ranges from 5-7% of the annual rent, potentially impacting the landlord’s decision to add it to their policy.

Landlords have the choice to cover the premiums for additional riders themselves or pass the costs onto tenants through rent adjustments or lease terms.

Flood Insurance: Addressing Water-Related Damages

Flood damage is often not covered by standard landlord insurance policies. To protect their properties from flood damage, landlords often need to purchase separate flood insurance through the National Flood Insurance Program.

Floods can occur unpredictably in any state, thus landlords should consider flood insurance even if properties are not in designated high-risk areas. Flood insurance typically covers the actual cash value for the structure and internal systems such as plumbing, electrical, and heating, as well as certain detached structures.

For rental properties, flood insurance provides compensation based on the actual cash value, not the replacement cost, accounting for depreciation at the time of damage. Landlords in flood-prone areas can add flood insurance as a rider to their landlord policy for enhanced protection.

Umbrella Policies: Extra Liability Coverage

An umbrella insurance policy for landlords adds an extra layer of liability protection over the standard landlord insurance policy. Personal liability claims that exceed the limits of a standard landlord insurance policy may necessitate an additional personal umbrella policy for comprehensive protection.

Umbrella insurance can cover a wide range of liabilities, including but not limited to property damage, personal injuries at the rental property, and certain legal actions like libel or slander. Before a landlord can add an umbrella policy, they are required to have a certain amount of liability coverage already in place. If a landlord does not have an existing policy that can be supplemented with an umbrella policy, they may need to purchase a stand-alone umbrella policy.

Commercial Umbrella policies can offer landlords high coverage limits, starting from $1,000,000 up to $100,000,000, for substantial liability claims.