Just as vacant property is subject to its own breed of risks, rented residential property is vulnerable to risks that specifically accompany tenant-occupied dwellings. When renters are present, the standard choice of homeowners insurance may not be enough to ensure adequate protection for physical loss or damage to the structure, or the added liability should someone be injured onsite.
A landlord insurance policy offers much-needed protection for these structures, but the details of that coverage are often looked over. In this blog, we provide answers to frequently asked questions about insurance for rental dwellings.
What is landlord insurance?
Landlord insurance coverage (also known as rental dwelling insurance) protects an occupied residential structure (and may protect the landlord’s personal property left onsite), should it sustain physical damage from a covered loss. Such coverage may also include the option for general liability insurance, to mitigate the expense of medical bills in the case of injury.
Who buys an insurance policy for their rental home?
Landlord insurance, such as that offered through US Assure, is geared toward owners with rent-able residential property. These property owners may be landlords, business investors, or simply individuals (or entities) for whom rent is a source of revenue.
What exposures are covered under a landlord insurance policy?
Insurance for rental property owners is designed to protect covered dwellings from direct physical damage to the structure or personal property left onsite. Though specific coverage varies from provider to provider, landlord insurance has been known to protect the structure from various exposures including fire, lightning, explosions, windstorms, hail, smoke and water intrusion (caused by sprinklers or leaky pipes, for example), with the option to include coverage for damages due to glass breakage and falling objects. Coverage for vandalism and theft may also be added, but specifications vary.
Owners of tenant occupied homes may be eligible to purchase general liability; however, restrictions vary between providers. For instance, if the property includes ponds, lakes, swimming pools, hot tubs, swing sets or trampolines (or the presence of exotic animals like wolves or ostriches), the structure may not qualify for insurance through US Assure’s landlord insurance product. For policy-specific answers, clients should consult with their insurance agent.
What types of rental homes qualify for an insurance policy?
Residential landlord insurance policies, such as those available through US Assure, are typically available for well-maintained, tenant-occupied, one-to-four-family unit dwellings with 12-month lease. These dwellings may include single-family homes, co-op units, row homes, detached structures, condominiums, townhouses, duplexes, triplexes and fourplexes. Eligible structures may not, however, include short-term rentals like Airbnbs, buildings with five or more family units, apartment complexes, those that are owner-occupied.
Risk value limits vary by provider. The landlord insurance product available through US Assure offers coverage for up to $5 million in property limits (with a $50,000 building limit for property and $20,000 limit for condos) as well as up to $1 million in general liability limits, subject to underwriter approval.
What insurance coverage is available?
Just as eligibility may vary, dwelling insurance for rental property varies by insurance provider. The landlord insurance product available through US Assure offers two coverage form types: basic and special. The basic form includes vandalism coverage. In order to qualify for the special form, the structure must be located in protection classes 1 through 7, be under than 40 years old with neither prior losses nor lapse in coverage. If the structure was built more than 40 years prior, the structure must have been fully gutted and renovated within the past 30 years. Similar to vacant structure insurance, whether the structure is over or under 40 years old, it must have also had a roof replacement within the last 20 years. Theft protection may also be added to the special form, if the structure has an active central alarm system that monitors for fire and burglary.
Additionally, a multi-location option may be available which enables clients to keep multiple “like” locations on one policy, provided the policy limit does not exceed $5 million.
If the tenant vacates the rental home, how does this impact insurance coverage for my client?
With the rental dwelling policy available through US Assure, landlords whose property is completely unoccupied may convert their coverage to a vacant structure policy.
Landlord insurance is crucial to protect clients’ financial interests when they’re renting their residential property investments. Learn what to look for when choosing a rental dwelling insurance provider when you download 10 Items to Consider Before Quoting Vacant and Rental Property Insurance.
This is intended as a general description of certain types of insurance and services available to qualified customers. Your policy is the contract that specifically and fully describes your coverage. The description of the policy provisions gives a broad overview of coverages and does not revise or amend the policy.