The Essentials of Landlord Insurance.

When most of us hear the word ‘landlord’, we think of an older wealthy person who lives overseas, or maybe a company that owns a bunch of rental towers. It makes sense, that’s what I think too, but its not always that complicated.

If you are an individual who owns a secondary property that you rent out, such as a condo or home, guess what? You’re that older wealthy person we keep talking about!

Now that we have that out of the way, let’s talk about how you can insure it properly.

Unlike other forms of property insurance, landlord coverages are seen as ‘riskier’ to the insurance companies for a very simply reason – someone else is in more control of the structure than you are.

Generally speaking, when you have tenants living in a space that you own, you want to take care of two major factors: damage to the structure, and liability exposure. Both concerns are addressed on a standard rented condo, or rented dwelling, policy.

There are some coverages and exclusions unique to rental policies. Unlike your primary residence coverage, you cannot insure furnishings (or contents) inside the rental unit as this is the responsibility of the tenant. It would be too risky for the insurer to protect you for damages to belongings when you are not the one using them, so for this reason the tenant must have their own coverage (and for their liability protection as well).

Another unique part of these policies is the ability to cover lost rental income. This can be a great feature to add because if the space became uninhabitable due to a loss, then the landlord can claim lost incomes from the space until it becomes rentable once again.

Now that we’ve discussed who is a landlord, the risks involved, and some unique differences, let’s chat on the best way to structure the policy.

As discussed earlier, some rental properties are owned through companies, while some are just in individual’s names. If you put a property into a company name, it limits the number of insurers interested in taking on the risk. Why, you ask? Because they don’t know if this holding company, or corporation, is conducting other business which might affect the risk exposure. Sometimes it can be mandatory to have a commercial liability policy in place before eligibility for adding property can be considered.

If you simply have the rental unit(s) under an individual’s name, then it can be insured as a stand-alone rental, or attached to your primary (residential) property policy.

Ok, that’s all for now! Good luck in your search, and as always, consider Alteri Insurance! Go to this page on our website to learn more.