As a residential property owner, you want to make sure that your investment is completely
secure in case of natural catastrophe, accident or damage. Standard homeowner insurance
policies do not cover long-term rental properties. You must have rental property insurance. If
you rent out your property for short-term or vacation stays on sites such as Airbnb or VRBO,
talk to your insurance company to see whether you need to add short-term rental coverage to
your homeowner’s policy. However, in today’s blog we seek to inform owners who will rent out
their property for months or years at a time.
Rental Property Insurance
This coverage, also called “landlord insurance”, can be purchased for all types of residential
properties including apartment complexes, houses, condos, or vacation homes. The owner
must not live on the premises if this type of coverage is to be issued. It offers protection for the
entire structure of the building itself, including roof, walls and foundation, as well as other
buildings such as a detached garage. Appliances, as well as the heat and air systems, can be
added as endorsements to the policy.
You must decide whether your tenants must carry renter’s insurance. It is not required by law,
but rather the decision of each individual landlord whether they will require it. This would cover
your tenant’s personal items in the residence. It would also add a component of liability
coverage should there be an incident on the property and the tenant was found liable in a
Income Replacement Insurance
In the case of damage to the rental property, or total loss of the building, the tenant would no
longer be occupying it and you will receive no rental income. Rental property insurance, as
discussed above, will cover repairs and replacement. But if it would be a hardship to lose the
monthly rent coming in, you may want to consider adding income replacement insurance to
your policy. Be careful to check the conditions, however, as most insurance companies will pay
out what is called the “fair market value”, and may assess your income replacement lower that
what you are charging for rent.
A renter’s insurance policy may cover the liability involved in an accident or injury to the tenant,
their family, and their guests. You can add additional coverage to your own rental property
insurance for an extra layer of protection against lawsuits.
You can discuss all these options with your insurance provider to ensure that you have the best
coverage for your needs.