What Does Landlord Insurance Cover? Do I Need a Policy?
While landlord insurance isn’t needed by all homeowners, it’s an important type of insurance to know about if you have any type of rental property. Late 2021, squatters took over an apartment in a $6.9 million townhouse in the Murray Hill neighborhood of New York City. They threw massive parties, hosted debauched poker games, and transformed the space into a members-only club complete with a brothel. Reports in the New York Post described loud music, clouds of pot smoke, and naked strangers roaming around the building’s shared lobby. With that kind of chaos, imagine the damage to the floors alone! So you know the first thing that crossed our minds when we heard this story: fingers crossed the landlord has insurance!
For those who own real estate properties, insurance is an absolute necessity, but if you plan to rent out your house or apartment, you’ll want to consider coverage beyond homeowner’s insurance by acquiring a landlord insurance policy. (For these policies to kick in, you’ve gotta be in the house.)
What Does Landlord Insurance Cover?
A landlord insurance policy is a type of insurance policy designed for landlords that provides coverage for:
- Property damage to the building
- Personal liability protection, which you’ll want in case your tenant makes a claim against you
- Personal property, which protects your things (though not those belonging to your tenant)
- Loss of rental income
Loss of Rental Income Insurance & Landlord Insurance
While most of those are clearcut, loss of rental income can be a bit confusing. Say a big storm floods your basement apartment and forces your renters to seek other accommodation. While your tenant’s renters insurance policy can help to offset their new expenses, it won’t pay your rent. Rental income coverage, however, will make sure you still get paid even if you’ve lost your tenants.
What Landlord Insurance Policy Do I Need? Is it Worth It?
Of course, not every landlord’s needs are the same, so you’ll want to talk to your provider to make sure your policy makes sense for you. Consider Marble Member Desmond, who owns a condo in Rehoboth Beach. While he spends most of the summer frolicking in the waves (so we’re told!), he rents out his unit for the month of June.
His coverage requirements differ greatly from those of World’s Greatest Fictional Landlords, Fred and Ethel Mertz, who rented out an apartment to Lucy and Ricky Ricardo (We can only imagine what Fred said when he was called in to replace the oven after it exploded with a six foot loaf of bread.)
Each situation has its own nuances and demands. If Desmond rents to strangers, he might want insurance; if it’s just his cousin on vacation every June, perhaps not. (And given that, for the majority of the year, Desmond’s condo isn’t rented, it might even be that there’s no need for landlord insurance. In this case, it might be preferable to simply add a rental endorsement.)
To figure out what kind of policy makes the most sense for you, your provider may ask questions like:
- How often and for how long will the home be rented out?
- Will the rental be furnished? Does the furniture need insurance?
- How much income will you make from rent?
- Who are your renters? Will there be a lease between you and the renters?
And in turn, you’ll want to ask your provider:
- What are the exclusions and limitations?
- Does this policy offer all risk coverage or limited ‘named perils’?
- Is water damage covered?
- Are claims settled on a cash value basis or for replacement costs?
- Are there discounts for updating any systems — for example, installing new security alarms?
Based on the answers to these questions, you should be able to find the right coverage for you and your rental.
Earn Rewards on Your Landlord Insurance Policies with Marble
Don’t be like Fred Mertz and let your tenants ruin your appliances! Landlord insurance and other types of insurance help protect your most important assets, so to sleep more easily, we encourage you to look at the options that best fit your rental needs. And once you’ve figured out your insurance policy needs, you can always create an account and add your policy to your Marble wallet, where you can keep your coverage cleanly organized while also earning rewards on your insurance.