If you’re a landlord renting out residential property for the first time, then we should tell you that your homeowner’s insurance is not going to cover your landlord’s insurance. As seasoned and experienced commercial insurance brokers, this is something that Benchmark Brokers experience every day with new landlords. It is important to figure out every aspect associated with your landlord’s insurance and all that it covers concerning natural disasters, accidents, and other damaging events. Here is all that you need to know about your landlord’s insurance.
Let’s begin with the basics
Why Do You Require a Landlord’s Insurance?
Most insurance policies cover owner-owned homes. This means that if you’re renting out your property to a third party then the coverage no longer applies. Sage Management Team explains that renters are not, or rather, cannot be held liable for large appliance malfunctions or damages to the property. Also if a person gets injured on the property through no deliberate fault of the tenant, or a forest fire destroys the property, or burglars choose to break in and steal valuables, you as a landlord will get no coverage from your insurance company for these or similar misfortunes.
This is where a landlord’s insurance can be a lifesaver. Your coverage will depend on your policy and what it covers, so before price shopping and looking into the cheapest deals, you should consider the potential things capable of causing damage to your property and choose a scheme accordingly.
What Does Landlord Insurance Cover?
Any proper landlord insurance will cover three primary aspects.
Damage to Property:
This covers any form of damage to the real estate or the furniture on account of natural disasters, fire, electric/gas malfunctions, earthquakes, vandalism, or irresponsible tenants. We recommend that you try to get a claim that provides replacement costs rather than actual cash value. In case the property is old or the furnishings are old, signing off on a cash value deal will not yield the required returns.
Rental Default Insurance:
This comes in handy if for some reason your property is rendered uninhabitable. The reasons can be several, like, termites, mold, sinkhole, rat infestation, etc. In this situation, your insurance company is going to offer you a lost rental income which is compensation that you would have received in the case that you were getting rent for your property.
Liability Protection:
This offers coverage on the legal and medical costs in the situation that tenants or visitors suffer any form of injury due to property maintenance issues. This might include situations like icy walkways, structural or architectural collapse, attacks from wildlife, etc.
You will notice underwriters refer to different packages as DP1, DP2, DP3, etc. These refer to the different levels of coverage on a dwelling property (DP). DP1 generally refers to the most basic whereas a DP3 would be more detailed and comprehensive.
Additional Coverages
These are not as vital as the main three listed above, however, having them does come to use in a lot of situations and it is always better to have them.
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Income Insurance
– This applies in a situation where a renter comes up short on their rent or cannot pay it at all.
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Flood Insurance
Quite obvious from the name itself, a lot of insurance policies do not cover floods due to natural reasons or plumbing problems. This is generally an add-on.
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Emergency Coverage
This covers the costs the landlord incurs on account of any repairs to the property. For instance, if a tenant complains about a broken microwave or dishwasher. Some or all the costs of traveling to the property and resolving the issue will be covered by the insurance company.
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Additional Constructional Expenses
This covers all the expenses required to bring the property up to code.
How Much Does Landlord Insurance Cost?
The cost of a landlord’s insurance varies from state to state. It is generally going to cost a landlord somewhere between 15% to 25% more than a homeowner’s policy. For instance, in the state of Texas, a landlord’s policy roughly costs between $900 to $2000. This is dependent on the kind of policy and coverage you’re going for. However, there is a relationship between the price of your premiums and the amount of time you spend renting the property.
Let’s elaborate.
A landlord is expected to pay almost double in annual premiums if they rent out a property for 12 weeks instead of an entire year. Why? The reason is that tenants renting the property for small periods might not be privy to all the faults and damages or they might not understand the layout of the house. This puts the insurance company at risk as there is a larger probability of problems in this situation. When shopping for policies be sure to ask the commercial insurance broker for bundle options. You might receive a discount if your homeowner’s insurance and landlord’s insurance are from the same company.
It is always advisable to safeguard your property and do a thorough background check on your tenants when renting out your property. For security reasons it is always recommended to get a landlord’s insurance policy, in fact, it is also advisable for renters to get a renter’s insurance policy, to cover their assets in the case of a mishap or unfortunate incident.
Conclusion
If you are looking to get a commercial insurance broker in Houston then Benchmark Insurance Group of Texas is your one-stop-shop for all your commercial and personal insurance policies. It is the easiest and most hassle-free way to buy insurance. All you have to do is log in to the website and fill in your details. You can start comparing insurances and choose the policy that fits you best. There are no middlemen involved and everything is crystal clear. Buying your landlord insurance policy just got more efficient.