What Is Landlord Insurance - ALLCHOICE Insurance - North Carolina

What Is Landlord Insurance?

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Return To: Landlord Insurance – The Ultimate Guide

You can experience countless benefits when you become a landlord. For one, being a landlord can become your ticket to earning passive income every month, and it can gradually build your wealth. As a landlord, you can also experience tax deductions and the flexibility of managing an investment. 

However, being a landlord can also become a challenge as you’ll have to spend a lot of money when your property gets damaged because of accidents, natural disasters, and other similar events. Without the right resources, these events can result in lifelong debts and chronic stress. 

Fortunately, you can effectively mitigate these risks by getting a landlord insurance policy. 

What Is Landlord Insurance, and Why Do You Need It?

Landlord insurance aims to protect landlords from risks associated with their rental properties. This kind of insurance usually includes contents and buildings insurance, as well as landlord-specific coverage, namely property owners’ loss of rent, liability, and tenant default insurance. 

Tenants won’t be held liable when a large appliance malfunction or a forest fire damages your rental property, and these misfortunes can require a lot of money from your pocket. With landlord insurance, you won’t have to worry about becoming bankrupt because this policy covers costs caused by humans or Mother Nature. 

Although it’s not a legal requirement when you start to rent out your properties, landlord insurance is vital because it helps you save money and ensures the longevity of your rental business. 

What Does Landlord Insurance Cover?

Countless insurance agencies offer landlord insurance coverage today. If you’re getting one anytime soon, make sure that the policy provides these three core protections:

  • Property damage: This policy protects landlords the moment properties and furnishings get damaged due to natural disasters, fire, electric or gas malfunction, vandalism, and irresponsible tenants. To get the most out of this coverage, make sure to get a policy that offers replacement costs or a predetermined lump sum of cash. 
  • Rental default income or lost rental income: This policy provides temporary rental reimbursement when your rental property becomes uninhabitable because of severe termites, molds, and pest infestations. 
  • Liability protection: With this policy, any medical and/or legal costs that might ensue will be covered. This means that you won’t have to shell out money from your pockets when a visitor or tenant gets injured because of property maintenance issues, such as architectural collapse and icy walkways.  

What Is the Additional Coverage of the Insurance?

The three core protections from the previous section can protect your assets as a landlord, but you can always add more policies to your coverage. These additional policies aren’t as vital as the first three mentioned, but these can save you more money in the long run. This is especially true if you’re managing more than one residential property. 

If you want to get more coverage from your landlord insurance, you can add these policies:

  • Guaranteed income insurance: This policy will cover the cost when a tenant can’t or won’t pay for their rent in a month. 
  • Flood insurance: Most landlord insurance doesn’t include coverage for flood-related damages, which is why it’s best if you add this policy to yours. This policy can help you save a hefty sum of money, especially if your rental property is located in flood-prone areas. 
  • Emergency coverage: This policy will cover costs incurred when a tenant asks for repairs or renovations around the property. When your tenant calls you out to repair a leaking roof or dishwasher, this policy will cover the money you’ve spent traveling to the property and the payment of contractors. 

How Much Does the Landlord Insurance Cost?

In 2019, the average cost of landlord insurance was $1083, with premiums ranging from $600 to $2000. Expect to pay more if you’re planning to add more policies to your coverage. 

However, the cost of landlord insurance varies because of the following factors:

  • Crime rate: Generally, you’ll have to pay higher premiums if your residential property is located in high crime-rate areas. If you want to save money on your insurance costs, make sure to invest in residential properties located in low crime-rate areas. 
  • Natural disaster risks: If your residential property is located in areas susceptible to natural catastrophes, such as tornadoes, storms, floods, and earthquakes, expect to pay more for your insurance premiums. 
  • Replacement costs: When getting landlord insurance, you should inform your insurer of the total replacement costs that your furnishings and fixtures might incur. This information will be considered when calculating your insurance premiums. 
  • Price of rent: Since your landlord insurance will cover the loss of rent when your tenant fails to pay, expect that you’ll have to pay for higher premiums if your rental fee is expensive. 
  • Age and condition of the property: Your insurer will also consider the age and condition of your property. The older your rental property is, the higher your insurance premiums are.
  • Number of rental properties: If you get landlord insurance for different properties under the same insurer, you might be able to access a multi-policy discount. This can help you save money on your insurance costs. 
  • Level of cover: You can have the option of adding more policies to your coverage, but this will require more money from your pocket. If you want to add additional policies mentioned in the previous section, get ready to pay higher premiums. 

To give you a better idea of how much are you going to pay for your landlord insurance, take a look at the sample below:

Dwelling coverage$655,000
Other residential propertiesNone
Personal property$5,000
Loss of use$50,0000
Liability coverage$1,000,000
Medical payments$10,000
Annual premium for landlord insurance$1,905 every year
Landlord Insurance – Sample Quote

If you want to save more money on your insurance premiums, you can invest in safety equipment for your rental property. For example, you can install motion sensors, alarm systems, and CCTVs all around your property.  

Get Insured Now

Getting landlord insurance should be one of your priorities once you decide to rent out your residential property. This kind of insurance is a smart investment because it enables you to have a security net when emergencies occur. 

Now that you know that having landlord insurance is vital, contact experienced agencies and submit a form to receive a quote. The sooner you get landlord insurance, the better and bigger benefits you can get from it.

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