What Is Landlord Insurance, and Should I Have It?

Osprey Property Management   |   date January 2023

Finding tenants for your rental property is just the first of many steps in being a successful landlord. Protecting your properties with landlord insurance is one of the many tasks you'll need to attend to if you are in the rental property investment business. This type of insurance is not the same as rental insurance, which we highly recommend for your tenants.

When mapping out your operating budget and analyzing ROIs, be sure to include the costs of this critical protection. If you're not sure about the coverage you need, the best property management Portsmouth offers can help! Here are some insights into why rental property owners need landlord insurance and how these policies work.

Do Landlords Need Special Insurance?

Many landlords may not consider getting the special insurance required for their rental properties. They may think they are covered if they carry a homeowner's policy.

Left Facing Red For Rent Real Estate Sign in Front of Beautiful House

However, a homeowner's policy typically only applies to a primary residence and won't cover anything that goes wrong if you operate a home as a rental property. So, as you determine the type of policies you need, you may have questions such as:

  • Does my homeowner's policy cover a rental home?
  • What will my homeowner's policy cover or not cover?
  • Am I required to carry any other insurance?
  • What does a landlord's policy cover?
  • Are there risks to not carrying insurance?

These are all valid questions that are vital to answer before choosing the proper coverage to protect you from liabilities or revenue loss for rental properties. However, while you might not be required by law to carry landlord insurance, as you read further on this page, you'll see why it's essential to have it.

What is Landlord Insurance?

We know that a homeowner's policy doesn't cover landlords, so we can assume that a landlord's policy is different. This type of insurance covers the properties you don't live in but rent out to others. 

However, it's not the same as renter's insurance, which is for the tenant's protection. A landlord policy will protect you from damages that might occur while a tenant is living in your home. You never know when an emergency maintenance request will turn into full-blown damage to your property. Renter's insurance will cover a tenant's belongings in case of an issue, but landlord insurance helps with structural problems, loss of income while a property isn't livable, and other issues that require protection for property owners.

Benefits and Risks of Having Landlord Insurance Policies

So, is it truly necessary to have landlord insurance policies for every rental property in your portfolio? Yes! 

It's beneficial to have a landlord insurance policy for protection if any of the above situations occur. Without an adequate policy, you could suffer a loss of income in numerous ways. You would have to pay out of pocket for the damage done to the property in the case of an earthquake, natural disaster, vandalism, electrical fire, or tenant damage.

Another benefit that a landlord policy will give you is coverage and protection against liabilities and lawsuits in case of an accident on the property. If some damage occurs to your property, and it can't be inhabited, the loss of rent can greatly reduce your income. With an insurance policy, you will be reimbursed and be able to keep up with your regular operating expenses. 

How Do Landlord Insurance Policies Work?

Landlord insurance policies generally have three primary protections that you can count on. Here is an overview of these protections. If you're not sure how these apply to your properties, a property manager in Portsmouth can help!

Property Damage Coverage

This coverage will take care of damages to your real estate property due to an earthquake, natural disaster, vandalism, electrical fire, or if the tenants cause damage by their actions.

Some policies offer replacement costs instead of the actual cash value of the covered items. Again, work with experienced property managers to decide which type is appropriate for you.

Lost Rental Income

Suppose an accident or damage occurs to your property. In that case, you may not be able to have anyone residing in the home. If the tenants have to move out, you'll lose money from the rental income. Your property will be uninhabited and not draw an income when that occurs. 

Your landlord's insurance policy will cover this loss.

Liability Protection

You may think that since you're not residing in the home, you're not responsible if an accident happens there. However, the owner of the property is the one who is liable if an accident occurs. 

With a landlord insurance policy, you won't be held liable for damages and injuries that occur on your property. The right policy may assist with payment for the medical or legal costs if someone brings action against you.

Happy senior middle aged woman customer landlord hold key to new house apartment give to cameraGet Landlord Insurance Help from the Best Property Management Portsmouth Offers

If you're not sure about landlord policies and what type you need, a property manager at Osprey Property Management can help! We can help you get the right insurance to protect your properties. Our professional property management company is standing by to make this process easier for you. Get in touch today for more information.

Learn more about managing rental properties with expert insights in our free download, the "Expert Guide to Rental Property Management."


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