In most cases, obtaining landlord insurance is a great way to protect yourself against the risks associated with tenants living in your home or apartment. Renting out a property you own can be lucrative – an excellent source of recurring cash inflow. However, landlords have their liabilities.
While homeowners insurance typically covers a home you own and live in, it will not protect you if you’re renting out your property for the long term.
So what is landlord insurance exactly?
It is a policy that covers any residential rental property, including its garages, sheds or other structures, and any items within the property that you own (from appliances to tools and more).
There are more details worth knowing, however. The following are six elements of landlord insurance that you should know before renting out your home:
- More security than a homeowner’s policy
A landlord policy requires more liability protection than a homeowner because it must cover legal counsel, fees, damages, and more.
- Protection against landlord liabilities
Landlord insurance offers you protection against claims and lawsuits brought against you due to an injury to a tenant, visitor, or trespasser because of landlord neglect.
- Ability to add more coverage
Landlord policies can typically be customized to include optional coverages. Examples of such coverage include unoccupied property insurance (ensuring a year’s worth of rental income if your property is vacant), natural disasters, and items such as furnishings, household goods, and light fixtures.
- The umbrella policy
If you own multiple rental properties, you can obtain what is know as an umbrella policy. This insurance affords you additional liability coverage on top of your landlord insurance. If the following policy does not completely cover damages or an injury on your property, umbrella policy kicks will cover the additional expenses.
- Tax deductible
Landlord policies are a tax deductible expenses, meaning you can recoup some of the money you paid to obtain this insurance.
- Not a legal requirement
While landlord policies are a great safe haven when renting your property, you are not legally required to have such a policy.
It’s important to note that your homeowners insurance likely protects your home for short-term rentals (think a matter of weeks). But if you’re renting out your home to be a recurring source of income, you are best served to get yourself a landlord insurance policy.
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