Every landlord have a duty to safeguard their rental property against all adverse situation. Find out what are the types of insurance that landlord can buy for their property.
Which insurance should I get? what’s best for me?
Landlord insurance, also called d non-owner occupied insurance, is an insurance policy that property owners buy in lieu of homeowners insurance if they plan on using their home or building as a rental property.
There are three types of landlord policies that offer different amounts and types of coverage, and individual policies and insurers have varying coverage as well.
This is long way of saying that the answer to whether landlord insurance covers tenant damage is — it depends.
What landlord insurance covers
There are three levels of landlord policies, just as there are three levels of homeowners insurance policies. For landlord insurance, these are are called basic dwelling property insurance or dwelling-fire form 1 (DP-1); broad dwelling property insurance or dwelling-fire form 2 (DP-2), and special dwelling landlord insurance or dwelling-fire form 3 (DP-3).
Landlord policies, whether DP-1, DP-2 or DP-3. Generally, DP-3 policies are the most comprehensive, followed by DP-2 policies, with DP-1 policies offering the least amount of coverage. But individual policies may vary in what they cover, how much reimbursement they offer, and when the coverage applies,
Types of landlord insurance coverage
Landlord policies consist of five kinds of coverage, though not all policies include all types of coverage:
- Dwelling coverage: Protects your property against accidents, natural disasters and thefts.
- Other structures coverage: Protects detached structures like garages and sheds.
- Personal liability and medical payments: Provides medical payments if a tenant or guest is hurt on your property or if a tenant brings a lawsuit against you for property damage or bodily injury. The liability portion of the landlord insurance policy may also provide a way for tenants to get reimbursed for damages to their personal property. For example, if you are found negligent in making repairs that lead to a plumbing leak, the liability portion of your insurance would both pay your legal fees and any settlement.
- Loss of rental income: Also called rental reimbursement or fair rental value. Protects your rental income business from loss of rent if tenants must vacate after a covered event.
- Personal property coverage: Protects your personal property that you leave on-site for the use of tenants (but not property owned by your tenants). Example of a covered loss: includes an appliance that gets fried in a fire. Additionally, you can schedule certain items on your policy to ensure reimbursement if they are destroyed.
How much reimbursement landlord policies offer
DP-1 policies are actual cash value (ACV) policies, meaning that in the event of a loss, the insurer will reimburse you for the depreciated value of your property.
DP-2 and DP-2 policies are both replacement cost value (RCV) policies, meaning the insurer would reimburse you for the full cost of replacing your property.
DP-2 and DP-3 policies also have higher coverage amounts than DP-1 policies.
When landlord coverage applies
DP-1 and DP-2 landlord policies are both named peril policis, which means they only cover damage caused by perils listed in the policy. DP-1 policies cover fewer perils than DP-2 policies. In fact, some DP-1 policies only cover damage from fire, while more robust policies and DP-2 policies also cover other perils, including hail, wind, falling objects, overflowing water from damaged plumbing, and more.
DP-3 landlord insurance is an open peril policy, meaning that all causes of damage are covered except those specifically excluded in the policy.
All landlord policies generally exclude flood damage (you need separate flood insurance for that) and earthquake damage (you need to add an earthquake rider to be covered). Additional exclusions may include intentional tenant damage (see more below).
Check your policy for your specific exclusions.