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Return To: Landlord Insurance – The Ultimate Guide
Landlord policies cost about 25% more than a standard homeowner’s policy. The Insurance Information Institute (III) explains this by stating that landlords need more protection than a typical homeowner.
When it comes to the cost of landlord insurance vs homeowners insurance, III figures reveal that the average homeowner’s insurance premium in North Carolina in 2018 was at $1,103. This makes the premium landlord insurance cost estimate around $1378.75 with a 25% increase.
This average cost of landlord insurance may vary depending on many factors that affect a landlord insurance policy’s cost. We have gathered the necessary information you need to consider when applying for landlord insurance.
What factors determine the price of landlord policy?
The III lists the following features as factors that affect how much landlord insurance may cost:
- Proximity to a fire hydrant or fire station: Insurers will consider your home’s or building’s proximity to a source of water. Other considerations include the factors that affect how long it takes to put out a fire, such as whether your community has professional and dedicated fire services.
- The house’s square footage and additional structures: The immediate space that your property takes up impacts the price of a landlord policy. Examples of other structures include garages, sheds, outhouses, and shacks.
- Proneness to natural disasters: The likelihood that your house may suffer damage from hail storms or hurricanes may require more protection. As such, landlord policy prices may be higher.
- Condition of the building’s mechanical systems: Insurers will consider the state of machine-dependent building services, such as plumbing, escalators, elevators, heating, air-conditioning, and electrical systems.
- Home features and construction materials: Landlord policymakers will look at the materials used to build your house when determining the cost of landlord insurance. The features that your property offers also make an impact. Some features include the countertop material (usually granite), hardwood floors, kitchen islands, and the number of bathrooms.
- Building costs in the area: Insurers may compare the cost of other buildings in your neighborhood when drafting your landlord insurance cost.
- Neighborhood crime rate: The average cost of rental property insurance may increase if the crime rate in your neighborhood is higher. Consider the following statistics on North Carolina crimes:
|North Carolina Property Crimes||Population||10,488,084|
|Burglary||Theft||Motor Vehicle Theft|
|Rate per 1,000||5.19||16.66||1.72|
These factors that affect the policy cost of landlord insurance only help gauge an average. Once a price has been set, consider learning the best way to save money on landlord insurance.
Why do I need landlord insurance?
As a landlord, you need more coverage than typical homeowners. Given that you are allowing people to rent your property, you need the proper insurance to protect your house and furniture from potential damages.
If you qualify as a landlord, insurance companies tend to deny claims for homeowners’ insurance if you do not list it as a landlord policy. You are considered a landlord if you rent out your property to a tenant, and you do not live in the same building that the renter is staying in.
Thus, if you are a landlord, you are eligible for landlord insurance. If you rent properties such as duplexes, vacation homes, or multiple rental properties, consider getting the appropriate coverage for protecting your rental properties.
The extensive protection that landlords require, unlike typical homeowners, comes from the fact that tenants could sue you for negligence. As such, you must be sure to maintain your property’s safety and ensure that your tenants have no reason to get injured on your property.
In case a tenant files a suit against you, liability insurance protects your financial assets. Should you be found liable for causing a tenant physical injury, emotional harm, financial struggles, or death, you must pay for damages accordingly.
Tenants can hold you liable for any injuries they may incur from property damage and even trauma that results from break-ins. Authorities will conduct proper investigations and determine whether you have been negligent. As such, you must adopt safety measures to ensure your rental property is in good condition.
You can avoid being liable for damages by implementing the following strategies:
- Secure your property’s condition: Be sure that your house is prepared to withstand disasters like winter storms or hail storms. Also, ensure that you equip your house with extra lights and secure locks to amplify your property’s safety and remain crime-free.
- Conduct necessary repairs: You must promptly attend to any maintenance repairs that your property needs. This ensures that you fix a problem before it becomes big enough to harm your tenants.
- Make regular safety inspections: Be sure to check for any hazardous materials or anything that may be lingering around your property that can potentially injure your tenants. Also, it is wise to review building and safety codes to be sure you remain compliant with them.
Apart from these common examples, you can read more about the importance of landlord insurance to ensure nothing goes wrong with the property you rent out.
What are the types of landlord insurance I can get?
Landlord insurances or dwelling policies can be one of the following packages or categories:
- DP1 Landlord Insurance Policy: This option has the most basic coverage. DP1 covers common perils including fire and lightning damage, internal and external explosions, windstorm and hail damage, vandalism, civil commotion, and riots.
- DP2 Insurance Policy: DP2 is an average landlord insurance policy that covers more specific damages, such as freezing pipes, vehicle collision damage, building collapse, accidental discharge, overflow of water and steam, and burglary damage.
- DP3 Rental Home Insurance Policy: This option is all-risk insurance coverage that is best suited for rental properties. It covers everything that DP1 insurance and DP2 insurance do. The difference is that DP3 has specific exclusions, such as law, mold, intentional loss, power failure, and war.
Each dwelling policy rewards two kinds of payouts:
- Cash value: This compensates for the cost of whatever was damaged.
- Replacement value: This compensates for the cost of the replacements for whatever was damaged.
Landlord insurance is necessary for anyone renting out a property to tenants. Its cost depends on several factors, from the prices of other houses in the neighborhood to the overall safety your house offers a tenant.
Get a quote today to get the landlord insurance you need to protect your rental property.