Landlord Insurance 101

Photo: Set of Apartment Keys

Owning and managing an investment property can be an incredibly profitable endeavor, but there also are a myriad of different ways that things can go wrong for a landlord. It is for this reason that landlord insurance exists in the first place, though here at Insurance by Castle, we find that many aspiring property owners don’t fully understand what these policies are or how they operate. We would like to remedy that with a quick rundown of some of the most frequently asked questions regarding landlord insurance:

What is Landlord Insurance?

Landlord insurance exists to provide coverage for property owners renting out a property, whether that be a residential home, an apartment complex, or a condo. In a nutshell, this coverage protects property owners from financial losses that can be incurred in countless different ways. Just like a homeowner’s policy, a landlord insurance policy makes sure your investment stays protected should property damage or legal issues befall you.

What Does It Cover?

As is the case with all insurance, coverage depends entirely on the policy. Generally speaking, most landlords invest in a policy that includes property damage coverage, liability insurance, and loss of income coverage. There also are optional coverages that property owners can add if their building is located in an area with extra risks not covered by the standard policy. Properties in flood or earthquake zones, for example, may require extra coverage.

How Much Does It Cost?

Again, it depends entirely on the property. The larger the building, and the more tenants that rent the space, the higher the coverage is going to be. Rates for small rental units can be surprisingly inexpensive, but larger units with extra dangers (like swimming pools) can get pricier. Location, size, number of units, age and condition of building, and type/amount of coverage are the most common influencers on premiums.

Why Do I Need It?

Just like with home ownership, just about anything can go wrong at any time, and with multiple families/renters in a property at any one time, the odds of something happening increase. As the property owner, you are on the hook for these calamities, and landlord insurance protects that property owner from the costs of replacements and legal fees. A small expense upfront is much better than a much larger, scarier cost down the road.

Is It Tax Deductible?

Check with your tax professional but many times landlord insurance is tax deductible. You can deduct the premiums on your rental property, including the landlord insurance as well as liability insurance and policies on the building’s contents. Owning a rental property is the same thing as running a business, so insurance costs count as business expenses and therefore can be deducted.

Where Do I Get It?

If you are an owner of an investment property or are perhaps interested in becoming one in the near future, your best bet for finding affordable and comprehensive landlord insurance is to contact us here at Insurance by Castle. Our professionals will help tailor coverage to your needs and budget to help ensure you never end up on the hook for a legality that could have been avoided with the right landlord insurance policy.