Even if you don’t have a mortgage on your income property, it’s still important to have insurance as a landlord.

Landlords need a specific type of property insurance geared towards rentals, which can help protect the property against damage, natural disasters, and potentially even the loss of rental income.

Insurance for landlords is essentially property insurance but with a few extra features. If you own a property and intend to rent it out, regular property insurance won’t suffice. In addition, many insurance policies will not cover dwellings where the owner is not the primary resident.

So what kind of insurance should you look for when it comes to your income property? Here’s what you need to know.

Policies You Should Look for as a Landlord

Although price is certainly a consideration when shopping for insurance policies, choosing a policy that meets your property’s specific needs is essential. Ideally, you’d want a policy that:

• Covers both the structure and contents of your property
• Protects against damage from a natural disaster (keeping in mind that most policies will not include flood or earthquake coverage)
• Liability protection for any medical or legal bills as a result of a tenant or guest injury
• Helps mitigate the loss of rental income from an unforeseen event, such as a natural disaster or vandalism

There are a few different policies you can consider for basic coverage, including Dwelling Policy (DP)-1 and 2. However, it’s best to look for DP-3 coverage, as it combines the protection from both DP-1 and DP-2 for comprehensive coverage.

For example, most DP-3 policies will cover damage from fire, freezing pipes, smoke, accidental water overflow, hail, vandalism, burglaries, and electrical damage.

What Landlord Insurance Will Not Cover

Although you can opt for a policy that covers the structure and contents of your income property, landlord insurance will not cover a tenant’s personal property, which is why it’s imperative to require your tenants to have renter’s insurance to protect their items and reduce your liability.

Landlord insurance will also not cover shared property, such as if your rental is in your basement, so you may need a separate policy for such situations. Your insurance policy will also not cover general wear and tear of the property, regular maintenance or repairs, or damage that existed before you bought the policy.

If you’re unclear on what the policy will and will not cover, don’t hesitate to ask your insurance company before purchasing the coverage.

Questions to Ask Your Insurance Company

Shopping around for a policy and getting quotes can help you get the most value for your policy as a landlord. It’s also helpful to ask questions to clarify details about the policy you’re considering and whether that policy is right for you.

Some questions to ask the insurance company include:

• What natural disasters are covered?
• Should I consider additional coverage based on my property?
• Does the policy cover both short- and long-term rentals?
• What are the deductibles for this policy?
• Are there changes or upgrades I can make to the property to lower my premium?
• Does this policy cover other structures on my property, such as a shed or barn?

It never hurts to ask questions that may help you save money or have more protection for your property when you need it.

Don’t Forgo Property Insurance

Forgoing property insurance as a landlord is usually not a good idea, even though this insurance isn’t required by law. Have questions about landlord insurance policies or how to ensure you get the most value for your money? Contact FAS Management today at (202) 337-5080, and we will be glad to assist you.