If you rent out residential property, even a granny flat over your garage or an apartment in your basement, you’re legally a landlord and face all the liabilities that come with that title. The short list of the risks you take on as a landlord includes:
- Law suits for wrongful eviction
- Law suits for libel and slander
- Law suits for discriminatory practices (denying rental because of a handicap or because the person has children, or because of race, color, gender, religion or national origin)
- Law suits for invasion of privacy (you entered the rental unit without permission or just cause)
- Law suits for injuries resulting from alleged negligence (you failed to repair a dangerous condition on the property)
- Loss of income if your tenant damages the property so as to render it un-rentable
Your basic property insurance typically does not protect you from these risks. Fortunately, there are a variety of landlord insurance policies and products that do. These are usually marketed as Landlords Insurance, Buy to Let Insurance, Let Property Insurance or Rental Property Insurance. Your particular situation will determine the extent of the coverage you need.
Start with a property insurance policy on the rental unit (or units) that covers the basics such a personal injury liability and fire, and build on from there. If the rental unit is in an area that is prone to flood, earthquake, hurricanes or other natural disasters that aren’t typically covered in the standard property policy, you’ll want to get these riders or supplementary policies.
If you have personal property in the rental unit (furniture, appliances, etc.), be sure you cover it in the policy. If the rental unit includes outbuildings such as a storage unit, pool house or garage, be sure it and its contents are covered in your landlord insurance property policy.
Do you depend on the income from the rental unit? For instance, do you need it to cover the mortgage? If so, purchase special insurance to cover loss of income if the unit can’t be rented because of damage. Your lien holder may actually require this coverage.
You can be sued for writing or saying something defamatory about a tenant. Anything that wrongfully accuses, ridicules or tarnishes the reputation – even an email or a shouting match in the yard – can be cause for a disgruntled tenant to bring suit. Of course, your first line of defense is to be prudent in what you say and write. Back that up with a landlords insurance policy that covers these potentialities, as well as suits for discriminatory rental practices, wrongful eviction and invasion of privacy.
You can take proactive steps to prevent suits and claims by keeping your property in good repair, eliminating hazards like cracked sidewalks and broken windows, and improving security conditions by installing smoke detectors and deadbolt locks. Doing so can even result in a discount on your landlord insurance policy.