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Landlord Insurance

Landlord Insurance Policies

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Landlord insurance refers to protective policies bought by property owners. It protects the owner from financial loss related to rental properties. Policies cover the owner's building, and can also cover property inside the building that belongs to the landlord. This type of insurance is different than homeowner's insurance. Property owners who rent to tenants on a long-term basis must ensure that they are protected against loss or damage.

These policies generally fall into three categories. DP-1 is the most basic policy. It covers simple damage from vandalism or fire. In the event that a property needs to be replaced, a DP-1 will give the owner the cash value of the property. This value is contingent on many factors, such as age. DP-2 is a broader policy, and can include coverage for collisions or weather damage. DP-3 offers the most protection for a rental property owner. It is an 'open peril' or 'special form' policy. This means that every peril is covered, unless it is specifically excluded. A DP-3 policy gives the owner the replacement cost, instead of the cash value, of a property.

Other protective policies are created to cover breakdowns of equipment, like furnaces and boilers. Rental property owners should also be aware of specific coverage that protects against loss of rental income. If a building is in need of repairs and the tenant must vacate, a claim can be made for loss of rental income.

Finally, building owners must ensure that they have excellent liability coverage. If a landlord is sued for damages by a tenant or by a passer-by, it's wise to have insurance up to $1 million on a rental.

Landlord insurance is crucial in protecting a rental property owner in the case of natural disaster, vehicular collision, tenant destruction, property loss, equipment breakdown, and even civil lawsuits.


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