Landlord insurance, homeowners insurance, and renters insurance
Many homeowners rent out in-law units, parts of their houses, investment homes, duplex, triplex or quadplex, but they only have homeowners’ insurance. This article explains about landlord insurance, homeowners insurance and renters insurance. We will address the importance of having landlord insurance to protect your investment that generates a steady stream of rental income.
Homeowner insurance and landlord insurance
Landlord insurance (a/k/a “buy-to-let” insurance) covers the building and property, just like a homeowners policy does for personal use of a property, to protect against both property damages and liabilities if someone is injured on the property. Both cover the actual building.
The difference is that the landlord insurance provides extra liability and rental income protection because it treats your rental property as a business.
The rental home’s homeowner insurance policy’s personal liability coverage won’t extend to commercial use of the property as long term rentals, or “business activities”, and neither will personal umbrella policies cover rentals’ liabilities.
When renting a property becomes a regular business on a long-term basis, the landlord needs a policy that covers commercial use, – leasing.
Protecting against loss of rental income
All landlords have homeowners insurance required for owning investment property against perils, but landlord insurance provides additional protection for your rental income to an extent, on top of building and liability coverage for the commercial endeavor of leasing: If you’re unable to rent out a room or building when it’s being repaired from a specific covered loss, you can recoup that lost potential income for a period of time.
Liability and legal fees
Landlord insurance also greatly expands liability coverage, so if someone gets hurt, a landlord insurance policy protects the landlord from legal fees.
Higher premium for landlord insurance is tax deductible
Yes, since it covers more, landlord insurance on average is about 20-25% more than a homeowners insurance policy’s cost, however, all of the landlord insurance premiums can be written off on your tax returns as business expense.
The risk factors that determine what landlord insurance costs are largely the same as what determines homeowners insurance policies, such as the age of the building, up to code or not, location and neighborhood, number of rental units, having a swimming pool on premise or not,
fire sprinklers, gates, burglar alarms, etc. Other factors such as types of incidents covered and the particular size of the policy all contribute to the premiums costs.
Landlords & renters insurance
Why would a landlord require renters insurance? Because landlord insurance won’t cover tenants’ possessions, even though the same landlord’s homeowners insurance covers damage to the landlord’s OWN personal items from theft or other perils.
Renters insurance is not required by any state’s law, yet some landlords require tenants to have it before they’ll allow them to sign a lease.
It is worth noting that renters insurance does not cover damage to the structure of the building, which is covered under homeowners and landlords insurance.
We are the Extra-milers to protect your business and properties
The Rick Callaway Team are known as the Extra Milers in protecting your business, employers, employees, and assets. We leave no stone unturned to get you the best deal. No under-coverage. No overpricing. Please call us for a free consultation: 925 788 5558 or email us at: rcallaway@pdins.com.