Do You Need Landlord Insurance?
Increasing numbers of homeowners are considering turning a second home into an investment property by renting it out. If you’re thinking about this alternative, depending on the type of rental you’re considering, you may need landlord insurance.
If you are planning to rent all or part of your primary residence for a short time (a week or less), you may not need a landlord policy. Often your homeowners policy will cover this situation. However, check with your insurance advisor to see if any additional endorsements are required.
If you want to start a bed & breakfast in your primary residence, you are then considered a business and will need a business insurance policy.
But when you decide to make a second home into an investment property to rent to tenants over the long term, you have become a landlord, and you will need landlord insurance. The policy may be customized to suit your needs and will provide the additional protection you will need as a landlord.
Options typically include:
- Standard structure protection. The home, any other structures on the property, and any owned items on the premises, such as appliances, are covered.
- As a landlord, you will need greater liability coverage to protect against claims for injuries on the property.
- Fair rental value coverage. This option reimburses you in the event of a disaster where tenants can no longer live in the home and aren’t paying rent. Your loss of rental income is covered while the home is being repaired or rebuilt.
- Some companies offer extra coverage options such as lock replacement and emergency repair service.
Because landlord policies provide the higher coverage you need, they typically cost about 25% more than a standard homeowners policy. However, discounts such as multipolicy and new/renovated home discounts may be available. Contact your insurance advisor for the option that’s best for you.