How does rental property insurance work?
What you need to protect your rentals depends on your situation. There are two common ways:
- You occupy the property you are renting:
You are living in the dwelling and there is a separate apartment. You'll need to advise the insurer to change the occupancy from "1 family" to "2 families". Most insurers will ask the occupants to get a renters insurance. This could be a condition to change the dwelling class to a "2 family residence".
- You lease out a property separate from your residence:
If you lease out a location that you do not live in, you will require separate rental property insurance. What you need will depend on the type of unit and many other factors.
What does landlord insurance cover?
It provides you with protection for your structure, items used to maintain the land, and liability. This includes your building structure on your land. It also includes legal fees if you face a lawsuit and other specific types.
This provides you with protection for physical structures. It includes:
- The building structure: Protection for damage because of fire, wind, hail, lightning, and other perils.
- Other buildings: Garage, deck, fence, etc.
- Landlord contents: Personal contents that are onsite to maintain the land. This includes a lawnmower, gardening equipment, and snowblowers.
- Lost rental income: As part of your landlord insurance, you could recover lost income if occupants or a customer had to move out because of a claim.
This protects the owner from legal liability. It will cover the legal fees and medical bills related to personal injury if the landlord has fault for the incident occurring.
Failure to maintain your rented dwelling is one of the most common sources of liability claims against landlords.