Practical Guide To Landlord Insurance – Dwelling Fire Policy

What is Landlord Insurance? 

Landlord Insurance, also known as a Dwelling Fire Policy, covers you from losses or injuries related to a property you own and rent out. 

Covered losses include damage to the building’s structure, loss of use, loss of rental income, and more. Landlord insurance is similar to a homeowners insurance policy with the biggest difference being that it is for those who own a home or property and use it for rental purposes.

We do recommend that if you have long-term tenants you should require them to take out their own renters’ insurance policy when signing a lease to help cover their personal belongings.

What Does Landlord Insurance Cover?

Landlord insurance policies are the best insurance policy for rental properties or non-owner-occupied homes. This type of policy provides additional coverages than what a primary residence homeowner may need. So, if you own a home and rent to tenants, this is the policy for you!

Before we continue, we want to make sure you are getting the right coverage. Insurance coverage can vary depending on your needs. Homeowners insurance is for those who own a home. 

If you are the tenant of an apartment or house, you may need a renters insurance policy. If you own a condo, you may need a condo insurance policy. Renters insurance and condo insurance will ensure you meet the unique needs for each situation.

Coverages that are included in a Landlord Insurance Policy:

Dwelling (Coverage A)

Dwelling coverage pays for damage to the home you rent out in the event of a covered loss. The amount you purchase should be enough to rebuild the house entirely, and attached structures (like an attached garage) in the event of a total loss – but should not include the value of the land. Note: Market Value or Assessed Value of your property should not be used to determine the cost to rebuild. These values are not good indicators of local building costs. Talk to your Bankers agent about how best to determine the cost to rebuild.

Other Structures (Coverage B)

Many properties have separate buildings such as sheds or fences. Other Structures coverage reimburses the costs associated with repair or replacement in the event of a covered loss.

Personal Property (Coverage C)

Property coverage provides protection for your property and covers items that remain in the home, such as personal belongings, window treatments, appliances, and furniture. Coverage is included in a Dwelling policy at Actual Cash Value (ACV), which is the value of the item at the time of the loss, minus any accumulated depreciation. This coverage can be upgraded to Replacement Cost (RC) for an additional premium. This will allow the property to be replaced with a like‐kind property at today’s market price subject to policy limits and deductibles. This is what most people prefer, and we highly recommend that you purchase Full Replacement Cost coverage as part of your policy.

Fair Rental Value / Additional Living Expense (Coverage D/E)

This is a combined coverage and provides coverage for Loss of Use and/or Loss of Rental Income due to a covered loss. 

Fair Rental Value provides protection for the loss of the rental income while the tenant is unable to live in the house up to the limit of liability.

Additional Living Expense this coverage is for the owner and provides reimbursement for additional living costs incurred while the owner is unable to live in the house.

Liability Coverage (Coverage L)

Coverage if your tenant or someone else sustains bodily injuries or damage to their possessions while on your property. This coverage also helps pay your attorney fees and court costs related to a covered loss.

Medical Payments to Others (Coverage M)

Medical Payments coverage helps pay for medical bills incurred by visitors to your rental property who sustain a bodily injury while on your premises.

Make sure you’re covered when it matters

Contact us today for a free landlord insurance quote. We’re happy to answer any questions you have and make sure you’re getting the coverage that’s right for you.

What is not included in a Landlord Insurance Policy? 

A Landlord Insurance or Dwelling Fire Policy provides you with peace of mind for properties you rent out. There are some disasters and items that landlord insurance doesn’t cover—for example, sinkhole coverage, water back-up, and theft. However, additional coverages for some of these situations can be purchased – be sure to ask your agent.

Additional Landlords Insurance Coverages:

Personal Property Replacement Cost Coverage: Provides contents coverage for the owner’s property at full replacement cost.

Sinkhole Coverage: Provides coverage for sinkhole losses; in certain counties will require a structural inspection of rental units.

Water Back-Up and Sump Discharge or Overflow: Provides coverage for loss resulting from water that backs up through sewers or drains or overflows from a sump.

Ordinance or Law: Provides increased costs necessary to comply with the enforcement of any ordinance or law which requires or regulates the construction, repair, or demolition of damaged property.

Limited Theft Coverage: Provides on-premises theft coverage to the property you own and keep on the premises. This does not cover property owned by your tenant.

Equipment Breakdown: Provides coverage for equipment breakdown as a covered peril; limit of liability is $100,000

Service Line Coverage: Provides coverage for costs to repair the covered underground pipes and wiring, as well as damage to outdoor property caused by repairs

Limited Screened Enclosure Buyback: Provides coverage to screened enclosures, pool cages, and carports permanently attached to the dwelling for loss due to windstorms or hail.

What about Flood Insurance?

Whether you live in a low or high-risk zone, we encourage everyone to consider flood insurance. We suggest using a flood map to find out if you’re at risk. Floods can happen anywhere, anytime–not just in coastal areas or near lakes and rivers. Flood insurance is a separate policy that covers flood damage caused by rising water. Even a standard home insurance policy does not cover floods. Torrential rain, snowmelt, mudflow, dam failures, and inadequate drainage systems can all cause flood losses. Make sure your property is covered.