5 Nightmares Covered by Landlord Insurance

October 22, 2018

When it comes to owning rental property, consider what type of insurance you need. Property insurance policies focus on properties that the homeowners inhabit. However, landlords don’t normally live in their rental properties. So, it’s in their best interest to purchase a Landlord Insurance Policy.

In the course of a rental property’s life, problems are bound to arise. Without landlord insurance, regular claims are often denied. Here are five examples of potential nightmares that landlord insurance covers. This knowledge can greatly reduce out of pocket repairs.


Dwelling coverage “guaranteed replacement cost”

Imagine your rental home gets destroyed by a terrible and sudden foundation problem. The entire home turns to ruins. Without dwelling coverage, your left with a devastating situation. Dwelling coverage is the basic coverage against property damage financial costs. Normally, it covers damage to plumbing and gas systems, appliances and fixtures.

a bathroom with many tools on the black tile floor with a plumber standing in the background holding a white marble basin

It also covers structural problems and other exterior items. For instance, awnings and shutters. If you want to take care of your entire home, look for “Guaranteed Replacement Cost” coverage. This type of coverage completely pays for rebuilding a property. It will cover the entire cost of building materials, even if it is more than the amount you were originally insured for.


Legal / medical/ liability coverage

Landlords are far more likely to get sued than normal homeowners. If an employee or tenant decides to sue you for damages, then seek legal and liability coverage. It will help you avoid spending too much money defending yourself. Almost every single landlord should have this form of coverage. Otherwise, it’s easy to amass enormous legal fees or have to pay huge settlements.

However, this kind of coverage has its limitations, as with any policy. Do you have multiple rental properties? You may want to consider getting an Umbrella Policy. This will cover you and your personal assets. It can be helpful in the event that a liability claim extends past the limits of your landlord policy. Generally, most lenders require that you carry liability coverage to protect their investments.


Water/flood coverage

Every year, raging floodwaters destroy homes. Yet, property owners regularly opt out of getting a flood policy. A flood policy should be carefully considered if your property is near a lake, river or ocean. Even if your rental home is not close to large bodies of water, a flood policy protects against other natural disasters that could lead to water damage. It also covers crazy events, such as tenants deciding to put a plastic pool inside the living room. This extra flood option is not always discussed very clearly. Since it is not a regular part of a basic insurance policy, it is important to ask about it.


Personal property protection

Personal property coverage is vital if you’re renting out a furnished apartment. However, landlords often choose to have it, even with vacant units. Contents coverage normally protects you from specific damage. For instance, to furniture, curtains, carpets, domestic appliances, household items, and light fixtures. Not all landlords want to have contents coverage though since it could cut into profits. It is important to consider the price of the extra coverage, compared to rental income. Carefully weigh the benefits of having the coverage.


Natural disasters

An aerial view of houses submerged under flood water. Only the rooftops and the tops of the trees are visible.

It’s crucial for landlords to consider the devastating effects of natural disasters.  Depending on the location, your property could be at risk of natural disasters. For example, tornado damage, hurricane destruction, earthquakes, etc. Protection from nature is an add-on that you will have to ask for. While considering the location of your property, it may be more cost-effective to opt out of the insurance. For example, hurricane damage is so common in Florida. So, hurricane insurance is extremely expensive. Surprisingly, it is often cheaper to opt out of the insurance and rebuild out of pocket. 


In conclusion

It’s important for landlords to carefully consider all insurance options. Landlord Insurance can ensure that your property remains an asset and will not end up costing you more money than it was worth. Make sure to ask your insurance agent plenty of questions about the type of coverage you should have.

Are you a landlord seeking help or guidance managing your rental property? Get in touch with Blueground. We help landlords in similar situations on a regular basis. Also, we guarantee a steady cash-flow and a maximized annual yield. Every issue is handled in a highly professional manner. We offer flexible contracts and carefully screen tenants to ensure the best people are staying in your property. Blueground is here to help you with all of your property management needs.

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