Are you in the market for some new real estate to rent out to someone? Is that fully-furnished basement of yours not getting much use? If that’s the case, you may be considering becoming a landlord! Nowadays, many people are choosing this option as an extra source of income. This is particularly true in expensive cities, such as Toronto. Being a landlord is an incredible way to profit from the properties you own. As exciting of an adventure as this will be, it also comes with a lot of responsibilities! Being a landlord can be challenging, time-consuming, and even risky due to real estate being such a sizeable investment. This is where landlord insurance comes into play. Luckily, isure has you covered with everything you need to know below.
What is landlord insurance?
Residential landlord insurance, also known as rental property insurance, is exactly what it sounds like. It provides protection that covers property owners from damage or financial loss on their property due to tenants. The specifics when it comes to landlord insurance can differ from policy to policy. However, it is quite similar to your standard home insurance policy, except catered to your rental units. This includes coverage for the building and the contents within it. Additionally, landlord insurance will usually cover liability arising from ownership of the property, as well as loss of any rental income. If you ever need help with a new landlord policy or want to review your current one, contact your isure broker today to discuss.
Is this different from my home policy?
Yes! Although both of these policies operate in a very similar manner, they are two separate entities. Generally, home insurance is designed around the assumption that you will be the one living in the space that is insured. In most cases, home insurance policies will only cover your own property, coverage, and personal liability for you. Of course, this will also expand to people who live with you, such as your spouse or kids, and will always stay within the household that is insured.
With this being said, your home insurance policy may potentially cover you if you are renting a space within your home to a tenant. However, it won’t cover the properties that you do not live in. If you are curious as to what your home insurance policy covers, your best bet is to always check with your isure broker or insurance provider. If your policy doesn’t cover the specific area(s) you wish, then landlord insurance is something you should definitely consider.
What does landlord insurance cover?
What landlord insurance will cover will differ depending on the policy you purchase. However, landlord insurance will typically provide protection for property owners from financial losses that are related to their rental properties. Generally, this is what you can expect from your landlord insurance policy:
1. General Liability Insurance
General liability insurance will cover the costs, both physically and legally, associated with damage sustained while occupying or visiting your property. For example, if your tenant slips and falls and injures themselves due to you not clearing their property of snow, you may be liable to pay for any damages. Or, if a tree that you have not cut has a branch that falls and damages their car, you may also be liable to pay. This is the type of coverage that general liability insurance provides.
2. Content Insurance
When you own a property, there is a good chance it will come with some contents. Generally, as a landlord, you will provide appliances, such as a stove, fridge, or even a washer and/or dryer. This is where content insurance for residential landlords comes into play. This insurance will cover costs associated with accidental damage that may be caused by situations, such as lightning, fire or flooding. For the most part, content insurance will not cover the belongings of your tenants, and won’t cover intentional damage such as wear-and-tear from excessive use.
3. Property Insurance
This type of insurance is not much different from regular home insurance. Similar to your own home insurance policy, property insurance will cover your building structure from natural damages, such as fires or weather-related damage. In each specific policy, there will most likely be an option to include property structures. This will come in handy if your rental property has a garage or shed. On top of this, property insurance will, in most cases, also include damage as a result of theft or vandalism.
4. Loss of Rental Income
If the worst were to happen and your rental property is destroyed or damaged to the point where it is uninhabitable, you will not be able to charge rent. This can provide for a big issue, especially if you rely on rent as a primary source of income. As a result, this is where the loss of rental income insurance comes in to play. Your coverage will pay for the missing funds until your tenants can resume renting again.
How much does landlord insurance cost?
Like any type of insurance policy, the cost of landlord insurance will vary greatly depending on what you have covered. Other factors will also affect the price of your landlord insurance policy, such as the value of the property being insured, as well as the location itself. If you already have home insurance with a specific company, it is also a good idea to bundle your landlord insurance policy with your home insurance to receive a potential discount.
It is always recommended to speak to your insurance provider about your exact property needs. This way, you will get an accurate idea of how much you will be paying to insure it.
What if I’m renting?
By law, you are not required to have renter’s insurance. However, many landlords are now asking their tenants to have insurance as a condition within their lease. This insurance is generally recommended as well, since it will cover your own belongings and provide landlords with coverage.
If you are considering becoming a landlord and renting out your property, give one of our knowledgable brokers a call. We take pride in having some of the best prices on the market when it comes to landlord insurance. With our top notch customer service, we can make finding a policy that suits you and your budget easier than ever. Request a quote today!
