Protecting your home or apartment with renters inside often means purchasing special coverage for potential building damage. Many landlord policies include this coverage along with rental income, personal contents and liability coverage. You can choose a building-only policy if that’s your main concern, but it may leave you on your own for other types of damage.
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What’s the difference between building insurance and landlord insurance?
Building insurance is one of three main components of landlord insurance, which usually covers building damage, personal belongings and any tenant-related issues, like tenants not paying rent. Some insurers automatically include building coverage in the landlord policy. For others, you’ll have to select this coverage during the quoting process.
You’re not obligated to get all three types and can just get building insurance if you so choose. The building portion protects the physical structure, plus fixtures inside or anything permanently secured or bolted to the walls or floor. Examples include built-in air conditioning units and dishwashers. You’re protected from a range of damages like:
- Leaking water
What other coverage do I need with landlord insurance?
Building insurance isn’t the only type of protection landlord insurance provides.
Another is landlord contents insurance, which covers the fittings and other personal belongings you keep inside the property. Fittings include carpets, curtains, free-standing appliances, paintings mirrors and furniture. Landlord contents insurance covers you from the same types of events as building insurance does: mother nature, impacts, leaking water, fires and more — but in relation to your belongings, not the building.
Rental income insurance is the third, and it covers you for lost rent. For example, when a tenant defaults on rent or your property is damaged and it’s unsafe to rent out. It also covers any intentional damage your tenant causes since building and contents insurance by themselves exclude that from coverage.
Landlord coverage types compared
|Landlord building insurance||Landlord contents Insurance||Rental income insurance|
|Damage to the building and fixtures due to weather, impacts, leaks, vandalism, theft and riots|
|Damage to your belongings and fittings due to weather, impacts, leaks, vandalism, theft and riots|
|Purposeful damage to the building or fixtures by the tenant|
|Purposeful damage to your belongings or fittings by the tenant|
|Legal fees related to landlord/tenant disputes|
|Loss of rent when the tenant defaults, leaves without paying or is released from paying by a court|
|Loss of rent when the building is damaged due to an insured event|
Do landlords need building insurance?
Building insurance isn’t required, but if you own the building, you’re making a huge gamble if you don’t have it insured.
If you lose your house to fire, it can cost you anywhere from $160,000 to $195,000 to rebuild a three-bedroom house, or $185,000 to $205,000 to rebuild a four-bedroom house. And that doesn’t include cleaning up the debris from the old house or paying for temporary accommodations.
If you own a whole apartment building, you can imagine how high your rebuilding costs could be.
Does landlord insurance cover building insurance?
It can, depending on what insurer you’re looking at. When you take out landlord insurance, you have the option of also being able to cover your building, as well as your contents. A typical landlord insurance policy will cover you for things like loss of rent and damage by your tenants, but a building insurance policy will cover you for things like natural disasters.
If you’re a landlord and decide that you don’t want to get covered for landlord insurance, you can still get a building-only insurance policy — though you likely won’t be covered for any events that are the result of your tenants, like renters damaging your property.
What if I’m renting out an apartment?
If your rental property is a unit or apartment in a rent-controlled building, your condo association will be in charge of insuring the building and you won’t need your own building coverage.
However, there are some aspects of landlord building insurance that your condo association won’t cover, or will cover but not as well as your own policy would. These include:
- Your fixtures, like bathroom suites and kitchen units. Some policies won’t cover fixtures that can easily be removed. Others might limit your fixtures coverage to a specific amount, especially if the condo’s policy doesn’t have a high enough benefit limit to cover the cost of repairing the building.
- Your legal liability. This protects you if someone injures themselves or damages their own property inside your rental property.
Familiarize yourself with your condo’s building insurance policy. If it doesn’t cover these things to your expectations, you can find landlord insurance that will fill in the gaps.
These are usually offered by insurers that specialize in condo insurance. They’ll likely offer landlord contents, loss of rent and malicious tenant damage coverage as well.
Your landlord building insurance protects you from paying for building damage out of pocket, including damage caused by tenants as well as natural disasters. Many companies include building coverage in an overarching landlord policy that also include income loss and personal contents.
If you’re looking for broad coverage at the best value, your best bet is to compare several landlord insurance companies.
Frequently asked questions about landlord building insurance
What’s the difference between landlord and homeowners insurance?
Homeowners insurance covers you for damage against natural disasters, but this policy would likely become null if renters are occupying the space. That’s because your home is at more risk for damage with renters.
What if my rental property gets damaged by a pet?
Your landlord insurance most likely won’t cover pet damage, but you can consider pet liability coverage if the pet injures someone while living in your building.
How much more expensive is landlord insurance than a homeowners policy?”]
Landlord insurance typically costs 15% to 30% more than traditional home insurance. However, the exact difference depends on the coverage, limits and deductibles you choose.
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