Top 5 Things to Check for in Your Landlord Insurance Policy

Owning rental property offers valuable investment opportunities, but it also introduces a range of potential risks. To effectively safeguard your property, income, and peace of mind, it’s essential to choose a comprehensive landlord insurance policy. Since policies can vary widely in coverage and terms, knowing what to look for—and which questions to ask—can make all the difference in your protection.

A smart approach is to use SimplyQuote's landlord insurance comparison service, allowing experienced professionals to compare options and find the right policy tailored to your needs. To give you an idea of what a landlord insurance policy typically includes, I’ve highlighted the top five things you should check for in your coverage

Point 1: Scope of Property Coverage

The foundation of any landlord insurance policy is its coverage for physical damage to your property. This typically includes protection against risks such as fire, storms, vandalism, and theft. However, it’s crucial to review the specifics:

  • Named Perils vs. All-Risk Policies: Some policies only cover specific perils listed in the contract, while others offer broader, all-risk coverage (excluding only those perils specifically excluded).

  • Building vs. Contents: Standard policies usually cover the building’s structure, but if you provide furnished rentals, you’ll need to ensure your policy also covers landlord-owned contents like appliances, furniture, and carpets.

  • Exclusions: Pay close attention to what is not covered. For example, damage from floods or earthquakes often requires separate coverage.

Tip: Always assess whether the sum insured reflects the current rebuild cost, not just the market value, to avoid being underinsured.

Point 2: Liability Protection

Liability coverage is a critical component of landlord insurance. It protects you if someone is injured on your property and holds you responsible, or if you are found liable for property damage to others.

  • Personal Injury: Covers claims if a tenant or visitor is injured due to a hazard on your property (like a loose stair rail or icy walkway).

  • Property Damage: Protects you if you accidentally cause damage to a neighbor’s property (e.g., a burst pipe floods the adjacent unit).

  • Legal Costs: Good policies cover legal defense costs in addition to any settlements or judgments.

Tip: Check the liability limits and consider whether they are sufficient given the size and type of your property. You may want to increase coverage for added peace of mind.

Point 3: Loss of Rental Income

A major concern for landlords is the potential loss of rental income if the property becomes uninhabitable due to an insured event, such as a fire or severe storm.

  • Rent Guarantee: Some policies offer rent guarantee insurance, which covers lost rent if your tenant defaults or leaves unexpectedly.

  • Alternative Accommodation: If your property is damaged and your tenants must move out, policies may cover the cost of alternative accommodation for them, ensuring you’re not left out of pocket.

  • Indemnity Period: Check how long the policy will pay out for lost rent—some may cover only a few months, while others may extend up to a year or more.

Tip: Understand the conditions and limitations for loss of rental income, as well as any waiting periods before coverage kicks in.

Point 4: Tenant-Related Risks

Not all tenants are the same, and even with thorough screening, issues can arise. Look for policies that address tenant-related risks:

  • Malicious Damage: Covers intentional damage caused by tenants or their guests.

  • Theft by Tenants: Some policies extend theft coverage to include theft by tenants, not just outsiders.

  • Legal Expenses for Eviction: If you need to evict a tenant, legal costs can add up quickly. Some policies offer coverage for these expenses.

Tip: Carefully review any tenant-related exclusions or requirements, such as the need for documented tenant checks or regular property inspections.

Point 5: Policy Exclusions and Conditions

Every insurance policy comes with exclusions and conditions that can affect your coverage:

  • Vacancy Clauses: Many policies reduce or exclude coverage if the property is vacant for a certain period (often 30-60 days).

  • Maintenance Requirements: Insurers may deny claims if damage results from neglect or lack of maintenance.

  • Short-Term Rentals: If you rent your property on a short-term basis (e.g., via Airbnb), standard landlord insurance may not cover you. Specialized coverage may be required.

Tip: Always read the fine print and ask your insurer to clarify any confusing terms or conditions. Failing to comply with policy requirements can invalidate your coverage.

Additional Considerations

While the above five points are essential, also consider these factors:

  • Optional Extras: Some insurers offer add-ons like accidental damage, emergency assistance, or coverage for outbuildings and communal areas.

  • Claims Process: Research the insurer’s claims process and reputation for customer service.

  • Premiums vs. Deductibles: Balance the cost of premiums with the deductible (excess) you’re willing to pay in the event of a claim.

Conclusion

Choosing the right landlord insurance policy is about more than just finding the lowest premium. It’s about understanding your risks and ensuring your policy provides comprehensive protection for your property, your income, and your legal liability. By carefully reviewing the scope of coverage, liability protection, loss of rental income, tenant-related risks, and policy exclusions, you’ll be well-equipped to make an informed decision that safeguards your investment.

Remember, insurance needs can vary depending on your property type, location, and rental arrangements. Regularly review your policy and consult with insurance professionals to ensure your coverage keeps pace with your circumstances.