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Landlord or Dwelling fire insurance policy covers the rental units that you own. This insurance typically includes both Property and Liability coverage protection against your financial losses or claims. It usually covers the physical structure of the property, other structures or the personal property that you own in the unit as a Landlord. It may also cover the medical expenses for another person or your legal costs in case someone got injured in your property that you are responsible for.
In some scenarios, the owner may live on the property making it an owner occupied building in which case the owner may not be able to get a Landlord insurance. In that case, the owner may go with a Homeowners insurance. If it is an apartment building with many units and one of the unit occupied by the owner, then the owner may get a Homeowners insurance for the unit owned by the owner and Landlord insurance for the rest of the units.
Types of Landlord Insurance
Dwelling Policy 1 - (DP1)
This policy has a very limited coverage. Though the policy is cheaper, they are the least favorite among the Landlords. In the event of disaster, the policy usually reimburses ACV (Actual Cash Value) of the property. Actual Cash Value is the depreciated rebuild value of the property. The usual perils covered under this coverage are Vandalism, Volcanic eruption, Fire, Lightning, Windstorm, Hail, Riot, Smoke etc.
Dwelling Policy 2 - (DP2)
This policy provides a moderate coverage. The difference between Dwelling Policy 1 and 2 are the replacement cost of the property. Dwelling policy 2 provides the cost to replace the damage of the property in the event of a disaster. DP2 covers all the perils of DP1 and provides some additional coverage such as Burglary damage, weight of ice and snow, freezing of pipes, electrical damage, cracking, burning.
Dwelling Policy 3 - (DP3)
This is the most common type of landlord policy also called as open peril or all risk policy where they include a wide variety of perils rather than specific perils. This policy provides the broadest protection.
Liability Coverage
This is another coverage that is usually included in the Landlord policy which helps you from paying out of pocket for the damage caused. It provides coverage in cases where you are legally responsible for the damage.
For example, if the patio is old and it crashes on the tenant, then the landlord may be responsible for the medical bills and legal costs. Landlord insurance protects and provides coverage in such cases.This coverage limit can be extended to higher limits through Umbrella Insurance Policy. If the landlord policy has a liability limit of $100,000 and damage caused is $150,000, then the excess $50,000 may be covered by your Umbrella policy.
Factors influencing the Premium
Factors that influence the cost of Landlord Insurance are
Risk of Natural disasters
Age and condition of the property
Deductible
Credit score
Proximity to fire hydrant and fire station
Replacement cost
Level of coverage
Optional coverage
These coverage can be added on to the standard insurance policy as an endorsement to increase the coverage and better protect your rental home. These additions depends on the specific needs of an individual renter. They vary depending on a number of factors. Some of these coverage may not be available under your policy or you may not be eligible for receiving the coverage.
Endorsements and Floaters - Endorsement and floaters are an additional insurance coverage for a specific high priced item for which the coverage limit under the standard policy is way below. In this type of coverage, the specific item such as jewelry, art work etc must be taken to be appraised, Once appraised, the insurance company will determine a premium based on appraisal value.
Flood Insurance - Damages caused by floods are not covered by the standard renters insurance policy. Depending on the location and chances of getting flood damage, it is advisable to get a separate Flood Insurance Policy. You may also have an option to add on the flood insurance to your renters policy.
Earthquake Insurance - Damages caused by Earthquakes are not covered by the standard renters insurance policy. Depending on the location and chances of getting earthquakes, it is advisable to get a separate Earthquake Insurance Policy. You may also have an option to add on the Earthquake insurance to your renters policy.
Non occupied dwelling coverage - Some insurance companies does not provide an insurance coverage if the unit is unoccupied for more than 30 days. By adding this endorsement, the coverage may be extended for longer time.
Loss of Rent Coverage - Loss of Rent insurance is also called as Loss of Use Coverage which provides coverage when the property does not provide income or is inhabitable due to factors like natural disasters.
Filing a Claim
If your landlord home is damaged by a covered peril, it is very important to file a claim as soon as possible after collecting necessary proofs and documents needed like photos, videos or description of the event with as much details as possible. Most of the insurance companies have a specific time frame within which the filing has to be done. Sooner you start, sooner you will be compensated for your damage or loss. The claims adjuster assesses the damage and once your insurance provider approves payout, you will be receiving the check for the compensation amount minus the deductible.
The events and items covered by your insurance policy differs based on your policy and insurance provider. The conditions and limitations of the coverage vary upon your specific policy. Inform insurance company ahead of time if you have any expensive structures in your property. This will act as a documentation for coverage in case any mishap happens.
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