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What Is Landlords Insurance / Rental Home Insurance?


Landlord insurance is a vague term utilized by many in the insurance industry. Landlord insurance may also be known as Dwelling Fire Insurance, Tenant Occupied Insurance or Rental Home Insurance. This form of insurance is simply residential rental property insurance for owners who rent 1 – 4 unit properties; the subject property may be a single family home, a condo unit, a townhouse, a duplex, a triplex or a fourplex.

If there is a mortgage on the property, the mortgage company may also refer to this form of security as Hazard Insurance simply requiring the mortgagor to cover the property with at least a basic fire insurance policy.

Landlord insurance is for non commercial landlords who own and rent one to four unit tenant occupied residential properties. The policy will cover your investment from damage and may also protect you from liability exposure unique to a landlord during the customary business process of a property owner.

As a rental property owner, you put great care into maintaining your property, you proceed with great caution during your tenant selection process and you should be just as careful about selecting the necessary insurance coverage to provide security for your risk.

Landlord insurance may be offered with options; it is imperative that the property owner discuss the options or endorsements available at the time of purchasing a new policy. The options may refer to property and/or liability; some endorsements may be available for a very small premium but may make a huge difference in the event of a claim.

For homeowners who are thinking about moving out and renting out their current residence, they should be warned that if your insurance policy defines your home as the primary residence of the titled owner of the property; renting out your home would therefore leave the home without coverage.

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One should be aware that the risk is substantially higher for tenant occupied homes versus owner occupied homes; the occurrence of fires, vandalism, water damage and liability exposure are much greater with tenant occupied homes. It is typical for tenants not to care for properties as well as owners would; also, many tenants may not be familiar with safety procedures such as shutting off the water during extended time away from the property. Also, it has been noticed that many tenants don’t report issues until they become more serious in nature thereby causing the need for greater repairs.

A Landlord should be protected against libel, slander, and wrongful eviction. Premises liability coverage which is optional on many policies protects the owner against personal injury claims. If a Landlord requires the tenant to buy renters insurance covering their own personal property and personal liability, in the event of a claim that may be caused by the negligence of the tenant, the Landlords Insurance carrier may subrogate against the tenant’s insurer for the cost of incurred damages.

Depending on the State and the underwriting carrier; there are generally 3 forms which may be used to insure a tenant occupied property; the most common is known as the DP-3 (Dwelling Property Form 3) which is known as a Special Form policy. This insurance typically covers the dwelling, other structures, the owner’s personal property, lost rental income for a covered loss, and some liability protection for the owner in case of injury or legal proceedings. It is imperative that the landlord study the coverage pursued and make certain that their required protection is covered by the policy purchased.

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Most Landlord Insurance policies offer a maximum option of $500,000 Liability protection; in many cases, lawyers advise that one would need much more coverage to protect their assets in the event of an unfortunate event; Personal Umbrella Policies are available for non commercial dwellings (1 – 4 units); these policies begin with $1 Million and range up to $5 Million in coverage for an incredibly lower premium than the primary policy. This may be well worth inquiring about since the same Umbrella coverage may offer you Extended protection over your Autos, your Primary Home and any non commercial tenant occupied property that you may own.

On a closing note, we recommend that you maintain your property well, utilize only licensed contractors, solicit the services of a reputable management company to handle the tenant selection process, spend some time reviewing your selected insurance coverage and then let your insurance carrier take the risk for the unexpected.

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  1. Landlords insurance policies typically do not cover any personal property belonging to tenants, or otherwise protect the interest of tenants; although a liability policy protecting a landlord or property manager will be of benefit to tenants should they incur a loss for which the landlord is responsible.

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