As a landlord, you spend a lot of time and money preparing your property. You want to make the most of your investment. But you should also protect that investment. A landlord insurance policy will protect you at affordable costs.
Keep reading to learn more about it.
What is Landlord Insurance?
First, let’s look at the definition of landlord insurance. Typically, you have two types to choose from. You can have one or both, depending on your needs. The first policy covers the physical property. The second type of coverage protects you financially from liabilities.
Your dwelling protection covers the physical property. Just like homeowners insurance, there are varying types. Each type covers a different peril, such as fire, vandalism, and theft. Most policies offer replacement cost coverage, which covers the full cost of replacing the property at today’s values.
Physical coverage may include coverage for:
- The property itself
- Other structures on the property
- Personal property of yours on or inside the property
You may add other riders to the policy that protect you from loss of use and medical bills. Loss of use protects you from financial loss should your property become uninhabitable. Loss of use should cover rents for a year, so make sure you choose accordingly. This helps you plan for the worst case scenario. Medical payments cover the cost of reimbursing anyone that is hurt on your property.
Liability insurance covers you against many things. First, it helps cover damages caused by someone getting hurt on your property. If someone slips and falls on your property, for example, you may be responsible for the medical bills.
Liability insurance also covers you if you are sued. It may not have anything to do with your property, but the liability insurance protects you from losing your property, since it’s an asset. Many landlords carry liability insurance of $500,000 to $1 million.
The Cost of Landlord Insurance
Every landlord insurance policy differs, just like homeowners insurance. Landlord insurance is homeowners insurance, but with even greater liability. Insurance companies typically charge as much as 20 percent more for property owner insurance than insurance for a primary residence.
Homeowners pay an average of $800 to $1,200 per year for homeowners insurance. That makes landlord insurance cost an average of $960 to $1,440 per year. As with any insurance, make sure you shop around to find the best deal, but also the best coverage.
Landlord insurance is vital if you own an investment property. Renting out a home can be a great financial investment, but you need to protect you. No one can predict the future. Anything could happen in the blink of an eye, leaving you with a financial mess if you don’t have proper coverage. Talk with several insurance agents to find the coverage that is right for you.