What Does Rental Dwelling Insurance Cover in a Rental Property

Rental dwelling insurance is designed to protect you and your rental property from various risks and losses. It can cover damages caused by fire, lightning, windstorms, and other natural disasters.

This type of insurance can also cover you against theft, vandalism, and malicious damage to your rental property. For example, if a tenant intentionally damages your property, your insurance can help you repair or replace it.

Your rental dwelling insurance can also provide liability coverage, which protects you in case a tenant or guest is injured on your property. This can include medical expenses and legal fees if you're sued.

In addition, rental dwelling insurance can cover losses due to water damage, including burst pipes and overflowing appliances.

Rental dwelling insurance covers a range of risks, including damage to the physical structure of the home. This is known as dwelling coverage, which protects you financially in case of damage from perils like fire, wind, storms, hail, lightning, and more.

Dwelling coverage can help pay for repairs if something like a tree limb falls on the house, causing damage. Depending on your insurer, it may also extend to other structures on your property, such as a shed or garage.

Liability coverage is also included in most landlord policies, which would cover legal fees and medical expenses if a tenant or their guest gets hurt on the property. This can provide peace of mind as a landlord.

Here are some additional coverages you may want to consider, depending on your location and risk tolerance:

Dwelling coverage is one of the most important parts of a landlord insurance policy, covering you financially for damage to the structure of the home against specific perils such as fire, wind, storms, hail, and lightning.

Dwelling coverage can help pay for repairs if something happens to your property's physical structure, like if a tree limb were to fall on the house and cause damage. Dwelling coverage may extend to other structures on your property like a shed or garage, too.

This type of coverage is crucial for landlords, as it can help protect their investment in the property and provide financial stability in case of unexpected events. If you're renting out a property, dwelling coverage can give you peace of mind knowing that you're covered in case of damage or loss.

In the event of a covered loss, dwelling coverage can help pay for repairs, including replacing damaged structures. For example, if a fire damages the roof of your rental property, dwelling coverage can help pay for the repairs.

Landlord policies generally cost about 25 percent more than a standard homeowners policy to pay for increased protections, but the added coverage can be well worth the extra cost.

Rental dwelling insurance can be a bit tricky to understand, but it's essential to know what's covered and what's not.

Covers structures on your property that are not attached to your rental home, such as a detached garage, shed, or pole barn.

If you have a detached garage or shed, you might be wondering if it's covered under your rental dwelling insurance. The answer is yes, it's covered under the "Other Structures" section of your policy.

A detached garage or shed can be a valuable asset, and you'll want to make sure it's protected in case of damage or loss.

Your rental dwelling insurance policy likely includes a specific dollar amount for Other Structures, so be sure to review your policy to see what's covered and what's not.

Water Backup can be a nightmare for renters, causing damage to floors, walls, furniture, and electrical systems. Backed up sewers or drains can happen unexpectedly, leaving you with costly repairs.

Coverage for Water Backup is available, and you can choose from a wide array of limits to suit your needs. This means you can tailor your insurance to fit your budget and protect your belongings.

Water Backup can occur due to backed up sewers or drains, which can be caused by various factors, including heavy rainfall or clogged pipes.

Wear and tear can look severe, but it's often caused by the daily stresses of living over time. Broken blinds, marks on walls, and worn carpet are all common examples.

Some types of wear may be reserved for your cost of doing business, but it's up to you to decide which items are normal maintenance versus those for which the tenant will be held responsible. Check your local laws and ordinances regarding security deposits too.

Damage done by tenants is not considered vandalism or theft, according to some insurers, because you have a written contract entrusting your tenant with the care of your property. That contract stipulates the penalties for any misuse of the property.

Optional coverage can be added to your rental dwelling insurance policy to provide extra protection. This can include coverage for deliberate physical damage to the home, such as vandalism.

You may also want to consider adding flood insurance, which typically only covers floods from burst pipes, unless you add-on coverage for sewer backup. Earthquake insurance is another option, which can provide protection against landslides and fire following an earthquake.

Some insurance providers also offer rent guarantee insurance, which pays a landlord if a tenant refuses to or can't pay rent. This can be a helpful addition to your policy, especially if you're concerned about rental income.

When choosing optional coverage for your landlord insurance policy, it's essential to understand what's excluded from standard policies. Intentional damage, for example, is excluded from insurance policies, including damage caused by tenants during the eviction process or shortly thereafter.

Intentional damage can take many forms, such as broken doors, missing appliances, spray-painted walls, and smashed mirrors. This type of damage is usually a sudden, one-time event.

The DP-1 insurance policy, a basic and no-frills option, excludes vandalism, which is a high-risk for vacant homes. It's crucial to consider this exclusion when deciding on your coverage.

The DP-1 policy also excludes water damage, which can occur due to various reasons like sewer backup, rising lakes, or fast thawing snow. This exclusion is significant, as water damage can be costly to repair.

If you're considering the DP-1 policy, be aware that claims are paid out as Actual Cash Value, meaning you'll receive the depreciated value of your property, not the current market value. This can be a significant difference in the event of a claim.

Here's a comparison of the nine named perils in a DP-1 policy:

Tenant damage can be a costly affair, with potential losses ranging from $5,000 to $30,000 or more, depending on the extent of the damage and your location.

Accidental kitchen fires caused by inattentive cooking are often covered by most property policies, but it's essential to review your policy to understand what's included.

The cost of repairs can be substantial, and you'll also need to factor in lost rental income, which can wreak havoc on your cash flow and profits.

Intentional damage, such as damage caused during the eviction process, may be covered through the security deposit or a civil suit, but it's crucial to document everything to ensure you're reimbursed.

In extreme cases, the damage can be as much as your property is worth, making it essential to have the right insurance coverage in place.

If you're regularly renting out a property, consider investing in a landlord or rental dwelling policy, which can provide additional protections and coverage for loss of rental income.

Optional rental property insurance can provide added protection for your investment. You may want to consider adding coverage for deliberate physical damage to the home, known as vandalism coverage, which typically comes standard on a home insurance policy but may not be included for income properties.

Flood insurance is another option, which is highly recommended, especially if you live in a flood-prone area. It's essential to note that standard flood insurance may not cover sewer backup, so consider adding that coverage as well.

Earthquake insurance is also worth considering, especially if you live in an area prone to earthquakes. This type of insurance can provide coverage against landslides and fire following an earthquake.

Rent guarantee insurance is a relatively new product that can help pay a landlord if a tenant refuses to or can't pay rent. This can be a lifesaver if the rental assistance program falls short or doesn't meet conditions.

Here are some additional options to consider:

Remember, the more you add on, the more property insurance will cost. It's essential to get an instant insurance quote and speak with a professional who can assess your unique needs.