Understanding Your Rental Property Insurance Policy

If you’re buying an investment property as a rental, mortgage providers require insurance coverage and understanding the types of coverage you need will help you get the best policy in place.

Landlord insurance provides protection against a variety of risks. Property damage coverage typically includes protection against a range of perils like fire and smoke damage; storm damage; vandalism; and burst pipes and water damage. Your landlord policy should also provide liability protection to cover legal and medical expenses if a tenant or visitor is injured on your property and holds you responsible. If your rental property becomes uninhabitable due to a covered peril, loss of rental income coverage can reimburse you for the rental income you would have received, ensuring you can meet mortgage payments and other expenses.

As an investor, you must be careful to ensure you have a full coverage policy, with no gaps for things like roof or hail coverage, as many carriers will ensure a property but exclude certain types of coverage.

There are other optional coverages you might consider based on your geographic area and circumstances. They include flood, earthquake, and building code coverage, which can help pay for the costs associated with upgrading to meet current building codes and regulations.

You might also consider coverage for landlord personal property if you leave items like a lawnmower at the rental property for maintenance or as part of the rental. If they are damaged or stolen, you are reimbursed for their value.

If you’re an investor with multiple properties, a portfolio product may be right for you, as you can bundle together your properties into one policy allowing ease and flexibility to move properties in and out as you buy and sell.