Landlord Insurance, home insurance, homeowners insurance

As a homeowner, you have three options when it comes to your property: live in it, sell it, or lease it out. Renting out your property can be a great way to earn extra income. However, becoming a landlord comes with several duties and risks.

When you lease your property, you essentially hand it over to strangers you know little about. Trusting them to take care of your valuable investment can be difficult. Unfortunately, you can do little to avoid this aside from creating a suitable contract. 

Many risks are associated with being a landlord, such as damage, theft, liability, and financial loss. These risks can arise from the tenants or the environment, resulting in significant costs. 

As a homeowner and landlord, it is essential to protect your property and investment, regardless of who the tenants may be. One of the best ways to protect your property is insurance – specifically, landlord insurance.

This article will discuss why homeowners may need landlord insurance and what the insurance covers.

What Is Landlord Insurance?

Landlord insurance is a form of home insurance modified for landlord’s needs and protects them from financial loss. The insurance covers homeowners who lease their property from landlord risks such as damages to lawsuits. 

The insurance can be purchased for long-term and short-term renting agreements. Landlord home insurance can be a blessing, as owning and leasing out a home is unpredictable.

Is Landlord Insurance Different to Homeowner Insurance?

Yes, landlord insurance differs from a classic home insurance. Landlord insurance has extra layers specific to the landlord’s risks that home insurance will not cover.

Home insurance will only cover the property if the policyholder lives there. The standard insurance will not cover any damage or loss if insurers discover the property is rented out; there may be fines for fraud claims.

Reason You Need Landlord Insurance

Property Damage Coverage

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The landlord is responsible for ensuring the property is in the best condition to attract and retain tenants. Various unpredictable factors can cause property damage. These factors include inclement weather, fires, floods, and more. 

Property damage could include damage to walls, fixtures, and equipment provided by the landlord. The landlord must repair the property as soon as possible, which can lead to hefty bills.

The main reason landlords need landlord insurance is to cover costly property damage. The insurance will financially reimburse the repair and replacement costs of damaged property and home fixtures.

Unlike home insurance, landlord insurance will also cover unintentional tenant damages. For example, if the tenant accidently starts a cooking fire, burning down the entire kitchen, including provided fixtures. It is the only insurance that adequately covers your property during sudden unfortunate situations. 

Loss Of Rental Income Coverage

When the property damage is serious, the landlord will not be able to lease the property and will lose renters. The rent is a significant income for many, and the absence of rent can cause severe financial damage to a landlord.

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Landlord insurance includes a loss of income coverage. The cover means that if your rental property requires sudden repairs (uninhabitable) or a tenant stops paying rent for an extended period, the insurance will reimburse you for the lost income. However, the landlord must provide a large amount of documents to get the correct value.

These include proof of total rent lost, evidence of attempts to retrieve the missing rent, a home inspection report, and a repair timeline. These documents are necessary to ensure the accuracy of the payout, confirm that the damage was unintentional, and ensure that repairs are made as quickly as possible.

However, the process may be more complex when the case is regarding the tenant’s no payment. The landlord will need to take legal action and get a court judgment before they get reimbursed for the loss.

Liability Coverage

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When renting out a property, there are always third liability risks. The third-party risk includes the chance of a tenant or guest being injured or damaging their property due to the landlord’s property.

The affected person will have the right to sue the landlord for compensation. The lawsuit will only be valid if the cause of injury or property damage was clearly due to the condition of the property or the landlord’s negligence.

For instance, if the landlord had the duty to repair the property, such as the flooring or stairs, but never did, which caused the tenant to slip and break bones

The landlord will be liable for legal, medical, repair and compensation costs. Thankfully, landlord insurance covers liability risks. The insurance will cover the expenses related to the third-party lawsuits. Liability accidents can occur on any property, and having insurance is the ideal protection in such cases.

Higher Coverage Limit 

Being a landlord and dealing with the risks can be costly. The costs can lead to financial loss and stress from repairs to lawsuits without the right cover. When leasing property, you have almost no control over the home and the activities inside.

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In most cases, landlords will be liable for costs even if it was the renter’s fault or negligence. Insurance providers understand these risks and costs associated may be higher when renting.

Therefore, landlord insurance provides a higher coverage limit than other home insurance policies. The coverage will reflect the value of your property to help you recover from the worst situations. The insurance will help cover most of the damage, loss or accident expenses. 

However, it is essential to note that the premium for landlord insurance may be a bit higher than that for standard home insurance, but it will be worth it.

What Will Landlord Insurance Not Cover?

Landlord insurance does not cover several factors. Both the landlord and tenant should review these exclusions to avoid financial loss.

Renters property: Landlord insurance will not cover any damage or loss that occurs to the renter’s property during a storm, fire or due to theft. Tenants will have to purchase their own home insurance, known as renters insurance.

Intentional Damage or Theft by Renters: Unfortunately, landlord insurance will not cover any damage suspected to be deliberate by the renter or landlord. The damages and loss can include holes in the wall due to nails and renters stealing or vandalising property. 

No renter’s agreement: Landlord insurance will be voided if there is no legal contract or agreement between landlord and renter. There needs to be a proper agreement to claim any damage or loss.

Wear And Tear/Maintenance Issues: Like any home insurance, landlord insurance will not cover damage due to wear and tear or lack of maintenance. A landlord must conduct regular inspections and keep the property in suitable condition. 

Unexpected events can result in disastrous outcomes, and landlords must protect their property and financial situation with landlord insurance.



To Learn More about landlord insurance and protect your property and belongings in Hong Kong and Asia, contact Red Asia Insurance.