Landlord insurance

What does landlord insurance cover?

Landlord insurance can protect you if your tenants get injured or your property is damaged. But it can’t protect you from all the risks of renting out a home.

Landlord insurance offers a broad range of protection across three critical areas: loss of rental income, damage to building and liability.

What additional benefits are available for landlord insurance?

There are a range of additional coverage options you may be able to add on to your landlord insurance policy, including:

• Flood insurance. This covers you if a flood damages your building.
• Vandalism coverage. If your tenant or someone else intentionally damages your property, this can help cover the cost.
• Guaranteed income insurance. Also known as guaranteed rent insurance, this covers the cost if a tenant doesn’t pay their rent.
• Burglary coverage. If someone steals your snowblower, lawnmower or any other equipment you keep at your property, theft coverage can reimburse you.
• Coverage to bring the building to code. If you repair your building after a covered incident like a fire or storm, you may be required to bring it up to code, bringing the repair costs above what a regular insurance policy will pay for. This coverage can help with the difference.

How much does landlord insurance cost?

Landlord insurance is more expensive than home insurance. Generally speaking, a landlord insurance policy will cost about 15% to 30% more than you’d pay for a homeowners insurance property for the same building. The exact cost will depend on:

• The type of property you own. A 5-bedroom house will typically cost more to insure than a 2-bedroom apartment, for instance.
• Where the property is located. This can affect the likelihood of you needing to make a claim. For example, a home in an area prone to severe storm and hail damage or in a high-crime area will cost more to insure.
• The site itself. Other unique factors about your property will also be taken into account. For example, if it’s surrounded by tall trees, your premiums could be higher.
• The value of your building How much would it cost to rebuild your property? The higher this figure is, the higher your landlord insurance premiums will be.
• How secure your property is. Does the property have any security features to deter thieves and burglars, such as a state-of-the-art alarm system? If so, this could lower your premiums.
• The age and construction of your property. The insurer will consider how old your property is and the materials used in its construction when determining how likely it is to withstand damage.
• Your claims history. If you’ve previously made multiple claims on your landlord insurance policy, you can expect an increase in the cost of coverage in the future.

Why do I need landlord insurance?

Landlord insurance:

• Protects you against risks faced by landlords. As a landlord, you’re exposed to a range of unique liability risks that don’t affect ordinary homeowners. The best landlord insurance provides the financial protection you need to look after your investment property.
• Provides peace of mind. Rest easy knowing that if something happens to your property, you’re covered.
• Is tax deductible. Landlord insurance is considered a business expense, which means that the premiums you pay towards your policy can be claimed as tax deductions.

Landlord insurance for condo owners

If you’re renting out a condo where part of the building is owned by a condo association, a typical landlord insurance policy won’t cover you. You’ll need to get a rental condo unit-owner policy, also known as a condo landlord policy.

A landlord policy geared towards condo owners can help protect you from liability and cover any damage to the building not already covered by the condo association’s master policy.

What landlord insurance exclusions should I be aware of?

Exclusions vary from policy to policy, so it’s a good idea to read the fine print carefully. You generally won’t be covered for:

Do policies cover me against damage caused by tenants’ pets?

No, landlord insurance is not designed to cover damage to the home caused by tenants’ pets. But you may be able to add on pet liability coverage, which helps to cover legal costs if a tenants pet bites someone or damages a neighbor’s property.

If you’re interested in renting to tenants with pets, talk with your insurer to find out more about how you’re covered and what restrictions to consider.

How to get the most out of your insurance policy

To get the most from your landlord insurance policy:

• Get a signed agreement. Many insurers won’t provide cover if you don’t have an official lease agreement in place that you and the tenant have both signed. Make sure you have a written agreement before a tenant moves in.
• Buy coverage before your tenant moves in. Make sure you purchase coverage before your tenant actually moves into your property. If the home is damaged before your coverage starts, you’ll be left to foot the bill.
• Consider extra coverage if your property is furnished. Landlord insurance generally won’t cover the contents of the unit. If you’re renting out a furnished home, talk with your insurer to find out if you’re covered.
• Conduct regular inspections. Regular property inspections are essential not only to minimize the risk of tenants damaging your property, but to also back up any claim you make on your policy. But make sure you follow all of the laws for notifying your tenant before entering the property.
• Keep detailed reports. Completed entry and exit reports with supporting photographs will protect you if any damage arises.
• Check exactly what’s covered. If you choose a landlord policy that also covers some of the contents of the property, look closely at the fine print to see exactly what is included. For example, check what fixtures and fittings are listed. Most policies offer protection for damage to items such as pipes and cables, fixed appliances, sheds, exterior blinds and awnings, and in-ground swimming pools.
• Require renters insurance. Requiring your tenants to have renters insurance before they move in means that their insurance can pay for liability lawsuits, temporary housing if the building is damaged and potentially your deductible if the tenant damages the home.
• Stay covered while untenanted. It’s also a good idea to check whether you will still be covered if the property is left untenanted for an extended period. You may have to satisfy specific conditions to ensure that coverage remains in place, such as actively seeking a replacement tenant.

Bottom line

If you’re renting out a home or unit, landlord insurance can protect you both legally and financially. To get the best policy for you, compare home insurance policies before getting started.

Landlord insurance FAQs

• Is landlord insurance legally required?

  No, there is no obligation for a landlord to take out insurance. However, some lenders require you to take out a policy before approving your application for a loan. It’s also a good idea to check local city and regional laws to find out if you might be subject to additional requirements.

• Is landlord insurance tax deductible?

  Yes, in most cases you can claim your landlord insurance premiums as tax deductions.

• When should I take out landlord insurance?

  The best time to buy a policy is immediately after you purchase your investment property.

• Does landlord insurance cover legal costs for evicting a tenant?

  No, but if your policy includes personal injury liability protection it can protect you if you’re sued for wrongful eviction.

• What happens if I, as the landlord, decide to move into the property?

  If you decide to stop leasing out your property and use it as your primary place of residence, you’ll need to get a homeowners insurance policy.