Renting out property that you own carries with it certain potential risks that require landlords to have adequate insurance. The types of insurance that cover rental properties are often called “landlord insurance” because they address the major risk factors facing those who are renting out their property:
This is the most basic, bedrock form of insurance for landlords as it covers the actual building being rented right down to the bricks and mortar. In the instance of a fire, flood or other disaster, building insurance will cover the rebuilding costs.
This type of insurance covers the costs of replacing the contents of the property in case of theft or damage. It is especially important if your rental unit comes furnished with beds, sofas and other furniture and appliances provided by you for the use of your tenants.
Alas, accidents happen, so landlords need to be protected from any potential lawsuits that may arise. In recent years the rate of property related personal injury claims have risen. These type of cases can also be expensive to settle, making liability insurance essential.
Loss of Rent Insurance
If something should happen to make it impossible for you to collect your rents, this type of insurance will protect you from facing a financial crisis. Loss of rent coverage is even more important if you have a mortgage on your property that you intend to pay off using rent money.
Legal Expenses insurance
Legal disputes can cost you money even if you win the case. Disputes with tenants, eviction proceedings and other legal actions surrounding rental properties can be expensive, so this form of insurance can potentially save you a lot of money.
Every rental unit is in some ways unique, which means that some landlords require more insurance than others. Some landlords also have unique circumstances requiring special forms of insurance. The best way to ensure that you have the right amount of landlord insurance for your specific circumstances is to consult with a professional insurance agent.