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These Are the Insurance Coverages No Landlord Should Be Without

Posted On Monday, 14 March 2022 19:55
These Are the Insurance Coverages No Landlord Should Be Without

Did you know that if your real estate investment property sits empty for as little as 96 hours, that your property insurance policy may no longer be valid? Or that the coverage purchased by your condo association still leaves you exposed to liability – despite you paying for that policy through your condo fees? 

As a homeowner you understand the importance of protecting your home with property insurance, but when you buy property to rent out, you become a landlord, your risks increase and you have more to lose. Case in point: the Konfidis real estate investing platform includes the cost of landlord liability insurance in all of its financial projections.

If you own a real estate investment property, read on to learn about the insurance coverages landlords should not be without.

Commercial/Rental Property Insurance 

If you used a mortgage to purchase your investment property, you are well aware of this coverage. It’s similar to your homeowner’s policy in that it can cover your property, structures and contents (just yours, not the tenant’s) in case of damage or destruction due to fire, flooding, ice storms, theft, vandalism and more.

You can also add rent protection coverage in case a peril makes your rental unit uninhabitable and therefore unrentable until it’s repaired

Many property insurance policies exclude coverage if the property has been empty for a specific amount of time – usually 30 days but some policies will void coverage in as little as 4 days.

It’s not uncommon for a rental or investment property to remain empty between tenants or during renovations. Check your policy to understand how your coverage works. You may be required to add coverage with a vacant/unoccupied property insurance policy.

Landlord Liability Insurance

This can be a group of bundled coverages or a stand-alone policy but landlord insurance protects your liability in several situations including:

  • Your tenant or a member of the public is injured on your property or from an incident that originated on your property.
  • A tenant defaults on rent payments or your property remains unrented. 

 

Returning to insurance for a condo unit, a condominium corporation or association may use a portion of the condo fees they collect to purchase insurance. That coverage, however, usually only extends to common areas such as:

  • Hallways
  • Elevators
  • Parking garages
  • Lobbies
  • Stairwells
  • Gyms and other recreational facilities
  • Party rooms

 

Their policy usually only covers what’s behind the interior facing walls of your condo unit and nothing more. So damage inside your unit may end up as your responsibility. That’s why if you’re renting out a condo, you will need to purchase condo insurance to protect you and your property. Coverage does not usually extend to the tenant’s property. 

Another crucial note about the condo’s insurance policy – If you or your tenant damage or cause damage to an area covered by the condo’s insurance policy, the insurance company may decide to sue you for the deductible or for amounts exceeding the policy limit. This may be possible for severe enough damage to a parking structure or as a result of a fire originating from your unit. Condo insurance, however would protect your liability for a covered claim.

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