If you are renting out residential property such as a house, apartment, or vacation cottage for the first time, you may expect that your homeowners\u2019 insurance will cover all the costs in case of a natural disaster, accident, or any other damaging event. Such an assumption is a recipe for disaster.<\/p>\n\n\n\n
Luckily, there is a type of coverage for landlords that can protect you from all threats related to renting out a property. But what is landlord insurance, how does it work, and do you actually need it? Keep reading to find out.<\/p>\n\n\n\n
Landlord policies offer protection similar to homeowners\u2019 coverage, such as dwelling insurance in the event of a fire or burglary. The main difference between the two types of insurance is that most homeowner policies only apply to owner-occupied properties. Should you start renting out your real estate to someone else, the coverage will no longer apply.<\/p>\n\n\n\n
Landlord policies are uniquely written to protect you against risks you may face as a rental property owner, such as injury liability or loss of income. Considering that tenants are rarely held liable for significant appliance malfunctions, burglaries, or forest fire damages, you could be left with serious consequences caused by such misfortunes.<\/p>\n\n\n\n
Therefore, getting landlord insurance makes a lot of sense. Still, given that these policies come in many different shapes, we advise that you take your time to figure out what you need to ensure that you get the right landlord insurance policy.<\/p>\n\n\n\n
Based on the length and frequency with which you rent out your property, there are three main types of insurance policies for landlords:<\/p>\n\n\n\n
Most landlord policies come with three core protections:<\/p>\n\n\n\n
There are a few more common riders that help form comprehensive landlord insurance policies. Although not as important as the aforementioned provisions, these optional endorsements could come in handy and potentially save you a lot of money in the long run.<\/p>\n\n\n\n
Here\u2019s a list of the most popular optional riders offered by most insurance companies:<\/p>\n\n\n\n
A real estate LLC<\/a> deals with buying, selling, or renting residential and commercial properties. Creating an LLC<\/a> for a rental dwelling is a smart choice for any property owner, as it can also work as a type of landlord\u2019s insurance for the rental property.<\/p>\n\n\n\n Not only does a limited liability company<\/a> structure separate your business and personal assets, it reduces the owner\u2019s liability and comes with the benefit of pass-through taxation. Another great thing about turning your rental into an LLC is that it\u2019ll give you more credibility when approaching new partners or clients – no matter if you work as a real estate professional or just have a single property you want to rent out.<\/p>\n\n\n\n Now that we\u2019ve answered the question \u201cwhat is landlord insurance,\u201d it\u2019s time to talk about the cost of this coverage type. <\/p>\n\n\n\nHow Much Does Landlord Insurance Cost?<\/h3>\n\n\n\n