If you own a rental property, it’s no doubt a source of income for you. Therefore, you want to protect your property with the right insurance coverage. Read on to learn why you likely need rental property insurance, what this insurance typically covers, and why it’s important as a property owner regardless of whether or not you're a full-time landlord.
Why Do You Need Insurance for Your Rental Property?
When you derive revenue from a rental property, you count on that money, whether it’s your entire income or a side hustle. If something were to happen to the property through no fault of your own, what would you do without your rental income? How would you pay for expensive repairs? These and similar things are why rental property insurance exists.
What Does Rental Property Insurance Cover?
Rental property insurance covers single-family homes, duplexes, apartments, and condos owned by you and rented out to others. A typical policy covers the property in the normal ways a homeowner policy does, paying for expenses related to repairs or rebuilding in the event of fire, storms, vandalism, and many natural disasters.
The structure itself is covered by the insurance policy, as well as elements inside the property that are owned by you, such as appliances, furnishings you supply tenants, carpeting, and window treatments. Everything you own that is not property of a renter is typically protected. So, if you rent out a fully furnished property, both the interior and exterior of the home are likely covered by the policy.
Additionally, rental property insurance covers elements of being a full- or part-time landlord that are not included in a conventional homeowner policy. For example, if a tenant causes serious damage to your property and you can’t rent it out, your insurance not only covers repairs but also can cover loss of income until it’s made habitable again.
Liability is also often covered for situations like:
- Injuries on your property
- Wrongful eviction
- Discrimination against tenants
- Libel and slander
What About Vacation and Homestay Rentals?
Just because you rent out a property only some of the time doesn’t mean you shouldn’t have rental property coverage. If you own a vacation rental or homestay property (like Airbnb, Vrbo, FlipKey, etc.), you still want to treat it like a business that provides income. Otherwise, you could be on the hook if renters seriously damage your property or take you to court over an alleged grievance.