Lost of Rents

As a landlord, the stream of income from your rental properties is an important asset. If it’s interrupted, you could suffer significant financial harm. If your property is damaged or destroyed and you lose a tenant, landlord insurance policies provide loss of income protection—typically for up to twelve months.

A homeowners insurance policy wouldn’t cover lost income, of course, because owner-occupied homes don’t generate income to the owner. It might spring for a hotel or apartment while your damaged home is repaired, but you don’t need that—you need the income, provided you can get the protection at an acceptable premium. If you don’t rely on this income, you may choose to skip this coverage and retain the risk in order to save on premiums.

Your landlord insurance policy may also provide funds to help your tenants rent temporary housing while your investment property is repaired. This way you won’t lose a valuable tenant.

If you live in the same building as your tenant, you may not need to get a whole new insurance policy. You can get an endorsement on your existing homeowners insurance policy covering liabilities arising from your tenant and your rental. However, you’ll likely need a separate landlord insurance policy if you’re renting a separate unit or structure.

A homeowners insurance policy will usually provide some coverage to structures like garages, carports, and sheds, up to 10 percent of the total coverage amount. Landlord insurance will require you to add coverage for these structures via a rider or endorsement; it won’t typically be covered automatically.