Residential real estate is a great way to diversify your portfolio, build future wealth and create a stream of cashflow today.  To protect yourself and your investment before your new tenants move in, make sure you have insurance for your rental property in place. 

What is landlord insurance? 

While every policy is unique depending on your specific situation, landlord insurance essentially covers property owners (you) from financial losses at the rental property. General coverage considerations include coverage for the physical building, any contents you own on the premises, liability issues from owning the property and covering loss in rent should something happen, like a housefire, that would cause rent to suddenly cease. 

How does landlord insurance differ from your home insurance? 

The most basic difference is that home insurance providers expect you to be living in the home whereas, with a rented property, someone else would be living in the home. Homeowners’ insurance covers you, your spouse and children (dependants) but not people renting at a different address.  

Consider an example: if a fire happens at home making your home inhabitable, your homeowners’ insurance will provide coverage for your family to live somewhere else while your home is repaired, or another suitable outcome is found. If a fire happens at your investment property, your tenants will be required to find suitable living arrangements for themselves while you, with the rental income coverage in your landlord insurance policy, will receive lost rental income. 

To protect yourself and your tenants, we strongly recommend that your tenants also be required to obtain tenants’ insurance. You can put this in your agreement and request proof of insurance before they can move in. In most instances, your insurance company will require you to ensure your tenants have adequate insurance in place.

What does landlord insurance cover? 

Landlord insurance, also known as rental property insurance, is customized to your needs. Most policies include certain basic coverage and provide optional extras depending on your level of desire to protect your investment. We are always happy to break down price options line by line with you so you can decide whether the cost for transferring certain risk is worth it for you. You may be surprised at how inexpensive the optional coverages are. 

Basic coverage: 

• Structural Coverage – this is the liability coverage for the structure you are renting. You can also extend coverage for outside buildings like garages and sheds. 
• Fair rental income protection – if the rented property needs to be evacuated (house fire) for any reason and your tenants need to vacate the premises, this coverage will pay you rental income replacement up to a predetermined amount. 

Option coverage: 

• Unpaid rent – provides cashflow should your tenants default on payments, pass away or if the property cannot be lived in. 
• Vandalism protection – For many, it is hard not to make an emotional connection with tenants. We assume trust of others and while others may be well-intentioned, you never know what may happen in the rented property. Vandalism protection provides coverage for the savvy investor to protect his property. 
• Theft coverage – if your rental property includes furniture and other items for tenants, you will want to consider this coverage. 

Why should your tenants have tenants’ insurance? 

While not required by law, many landlords are requiring their tenants to carry insurance as a condition of their lease. Why? It provides protection for the landlord while also providing protection for the assets tenant’s have worked hard to accumulate. Landlord insurance will not protect your tenant’s belongings or provide any sort of liability coverage if they unintentionally damage the property. In many ways, tenant insurance provides a greater sense of peace in the landlord-tenant relationship. 

What are the different types of landlord insurance? 

We help you find the right type of policy for your needs. Whether you are investing in a residential rental property, apartment building, rental condo, student rental building or AirBNB ,we have a savvy insurance solution for you.  

Investing in real estate is a big financial decision. Taking the time to understand how insurance protects your investment is important. We are here to help answer any questions you have, discuss your situation, provide advice and recommendations and listen to any other concerns you may have. 

Get in touch with us today to start a conversation.