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Is Landlord Insurance All that Different from Standard Property Insurance?


Even at the best of times, insurance can be a tricky and complicated business. Even when it comes to property insurance, you might be surprised how few people actually understand their insurance policy and are not quite sure what they are covered for. Indeed, deciding on an insurance policy for an investment property is no picnic, even more so if you’re going to be renting it out.

So where do you start if you have no experience? Some first-time landlords don’t completely understand the difference between landlord insurance and standard property insurance. Some may even think that they can get by fine by just getting property insurance, the thinking being that this basically covers anything that could go wrong and damage the house/property anyway.

But in reality, there are obviously a number of differences between these two categories of insurance that make it a considerable risk to ignore landlord insurance. Let’s take a look at a few of the differences and why landlord insurance is so important.

Why are their differences between the two?

It’s important to note that landlords have different insurance needs than homeowners, who are usually living in and own the property. This stems from the fact that each has different responsibilities, expectations and risk factors. For obvious reasons, a landlord has a higher level of risk than a tenant – more things can potentially go wrong.

For this reason, landlord insurance policies are essentially property insurance policies, with some added features or policy elements on top.

What are the additional policy elements?


One of the major risk factors that exist for a landlord is the uncertainty surrounding the tenant(s), which is part of the reason you need to select them so carefully. If a tenant is unable or unwilling to pay rent, suddenly a portion of your income is lost. Income protection, which is a feature of landlord insurance, covers you for this loss amount as well.

The potential is also there for a tenant to damage the property and/or contents therein, either accidentally or deliberately. If a homeowner damages their own property, it’s usually up to them to pay for repairs, however, in the case of a rental property, most landlord insurance policies will cover for damage by tenants.

Another consideration is the fact that as a landlord, you are responsible for the tenant’s safety (obviously this is true up to a point). If a tenant is injured or worse as a result of your negligence or something that needed fixing in your home but was not, you may be held responsible. Property liability insurance ensures that you are covered in these cases from any payouts that may be forthcoming.

Lastly, a good landlord insurance policy will cover legal costs that may come up as a result of a disagreement between the two parties. This can be a costly, long and tiresome process in most cases, so is generally avoided if possible. However often there is no resolution – again this goes to show how important it is to choose your tenants carefully.


If you are a first-time landlord, landlord insurance is a must (Tips for first-time landlord to become successful). Obviously, the best advice is usually to get a few investment property insurance quotes as well as looking at landlord insurance options, and figure out which minimises your risk the most relative to the cost. You may find that having two policies that cover different things may be more cost effective than investing in only one. Do your homework and you’ll be fine!

Author Bio:

David Nicoll is a freelance writer and an independent blogger who writes for insurance, rental properties insurance and landlord insurance related articles.

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Home Insurance Exclusions You Should Know About

Home insurance isn’t a product of luxury. Though it’s usually a costly thing, in some cases it is required. Home insurance is good for your protection. Dangerous neighborhoods, suspicious personalities, frequent and long-lasting business trips can initiate your desire to insure your house. Home is a treasure for most of us and it should be protected.

Unfortunately, most of the insurance companies prioritize the profit over your safety. That’s why they hide some aspects of insurance, namely cases that go beyond coverage. While people may think they are protected, in the reality, they are helpless. Often in case of emergency homeowners have to rely on quick easy online loans because their insurance doesn’t cover many unexpected costs. This is the reason knowing the most common exclusions in a home insurance policy is so vital. Learn how to protect yourself as early as possible.

Natural Disasters

Natural disasters and uncontrolled situations are the most common cases that a simple coverage package doesn’t include. People can find out that their insurance doesn’t cover earthquakes, floods, hurricanes, landslides only after these disasters happen.

What should you do? You should ask your insurance agent if your package contains these cases. In most of the cases, insurance doesn’t cover natural calamity. That’s why most of the house owners purchase additional packages.

If you live in the at-risk area where floods and other water damages often occur, you should look for the specialized coverage programs. Federal Emergency Management Agency (FEMA) offers National Flood Insurance Program (NFIP). The agency launched a program in 1968 and keeps on helping people from high-risk areas to protect their budget from losses. High-risk areas are the regions that have 1% or greater probability of flooding in any year. It’s equivalent to a 26% chance of flooding during a 30-year mortgage.

Speaking of the earthquakes, most of the insurance companies offer earthquake coverage as an additional endorsement to an existing policy.

So, insurance packages don’t usually include all kinds of the water and earth damages.

War

Losses and home damages, which a war caused, are also usually excluded from insurance. State Farm Insurance Co. is the company that insured more houses in the country than any other insurance company in the USA. Still, even this company doesn’t cover damages from war or acts of terrorism. Still, a spokesman for the company confirmed that they might pay a claim in some cases.

You can’t know for sure whether your coverage includes war and terrorism cases. So, it’s important to ask your insurance provider about it beforehand.

Congress of the USA though, in the last year announced that government will pay insurance for damages caused by foreign terrorist acts if they are more than $5 million. If they are less, coverage isn’t established by law.

Governmental Action

Unfortunately, any kind of the governmental public actions isn’t covered by insurance. There are cases when a homeowner gets under the violation of a municipal ordinance. It means that special services must take measures (perform construction work) to fix the property so it complies with rules set by City Council. The coverage company won’t compensate the costs for construction work. Unfortunately, agents don’t usually emphasize the fact that packages don’t include coverage for ordinance compliance expenses and compensation for flawed construction. Again, it’s important to make everything clear at the beginning and ask for the additional statements.

Other Home Insurance Exclusions:

  • Nuclear accidents
  • Sinkholes
  • Freezing of plumbing, heating, air condition, or automatic fire-protective sprinkler system
  • Falling objects
  • Mold
  • Wet rot

Furthermore, make sure that your insurance policy covers cases of neglecting. These cases are the situations when the measures that could prevent damages could be provided but weren’t provided. Insurance companies usually win on these cases as people don’t pay attention to such tricky things.

To protect yourself be sure to study the contract thoroughly and consider all coverage aspects beforehand. It’s so easy to fall into a trap. So, stay cautious and benefit!