At Raleigh Wills Insurance Services we define landlord insurance as individuals who own a single family dwelling, a duplex, a triplex or a fourplex, rented to others. For individuals who own five units or greater in a building, we introduce you to Apartment Owners Insurance.
Landlord insurance covers several areas. It covers damage to your building, loss of rents and liability or legal responsibility for any injuries, property damage or personal injury (wrongful eviction, liable or slander) landlords may cause to others. This would also include damage caused by tenants.
Damage caused by most disasters are covered, but there are exceptions. Standard landlord policies do not cover flooding, earthquakes or poor maintenance. Earthquake coverage is available either in the form of an endorsement or as a separate policy. Most maintenance related problems are the landlords’ responsibility.
Standard Landlord Insurance Policies Include Four Essential Types of Coverage
1. Coverage for the Structure of the Home
This part of a policy pays to repair or rebuild a building if it is damaged or destroyed by fire, hurricane, hail, lightning, tenant vandalism or other disasters listed in the policy. It will not pay for damage caused by a flood, earthquake or routine wear and tear. Most standard policies also cover structures that are not attached to a house such as a garage, tool shed or gazebo.
2. Coverage for Landlord Personal Belongings
Furniture, appliances and window coverings that you own within your building are covered if they are stolen or destroyed by fire, hurricane or other insured disasters, if you purchase this coverage.
In the event that your tenant has to vacate the premises following a covered loss and cannot pay rent, this coverage will provide reimbursement for the loss of rents that are incurred until the covered damages are repaired.
This section of the policy covers against lawsuits for bodily injury, property damage or personal injury (wrongful eviction, liable or slander) landlords may cause to others.
The liability portion of the policy pays for both the cost of defending the policyholder in court and any court awards—up to a limit that you choose for the policy. Liability limits start at $100,000 and can be increased to as high as $1,000,000.
Types of Perils Landlord Insurance Covers
- Fire or lightning
- Windstorm or hail
- Explosion
- Riot or civil commotion
- Damage caused by aircraft
- Damage caused by vehicles
- Smoke
- Vandalism or malicious mischief
- Theft
- Volcanic eruption
- Falling object
- Weight of ice, snow or sleet
- Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance.
- Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire-protective system.
- Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system, or of a household appliance.
- Sudden and accidental damage from artificially generated electrical current
There are three coverage options:
1. Actual cash value
This option pays to replace the building or personal belongings minus a deduction for depreciation.
This option pays the cost of rebuilding or repairing the building or replacing personal belongings without a deduction for depreciation.
3. Extended replacement cost
This option pays a certain percentage over the structural limit to rebuild the building. This gives protection against sudden increases in construction costs due to a shortage of building materials after a widespread disaster or other unexpected situations. Generally, it is 25 to 50 percent more than the structural limit of the policy. For example, if the structural limit is $500,000, the option provides up to an additional $125,000 or $250,000 of coverage.
It generally won’t cover the cost of upgrading the building to comply with current building codes. However, an endorsement (or an addition to) the policy called Ordinance or Law can help pay for these additional costs.
