A rental home insurance policy, or what some people refer to as a Landlord Policy, is very similar to an owner-occupied home, with two main differences. Instead of the personal liability coverage, the policy offers landlord liability for the premises. Typically the contents limit is less on a rental property than on a personal residential home, since it’s covering the items used to service the property.
What is covered by a rental home insurance policy?
There are two main parts to a homeowner’s insurance policy. Whether you have a homeowner’s, renter’s, condo, or rental home policy, they all have these same two sections.
PART I: PROPERTY
This limit covers damage to the home and any attached structures, such as decks and garages. Make sure the limit on your policy is enough to rebuild your home. Land value is not a part of this calculation, and this replacement cost value is not tied to the market value. The Replacement Cost limit is just that; it’s the cost to replace / rebuild the structure from the ground up if it was completely destroyed.
This covers structures not attached to your home (detached garage, shed, mother-in-law unit, gazebo, fence, etc.). The coverage is automatically included in the policy, even if you don’t have any detached structures to insure.
Personal Property (Contents)
In a landlord policy, this coverage is typically for any furniture and appliances that are not permanently attached to the structure, as well as property used to maintain the property such as a lawnmower.
Loss of Use – Additional Living Expense
This part of the policy will pay for the lost rental income due to the home being uninhabitable as a result of a covered loss such as fire.
PART II: LIABILITY
Landlord Premises Liability
This provides defense and pays legal expenses relating to the rented premises. If a tenant is hurt in the home you're renting out and you are found legally responsible, the liability coverage on your landlord policy may help pay for the resulting medical expenses or legal fees. Typical limits available are $100,000, $300,000, and $500,000.
Additional Coverages to Consider
Most homeowner’s insurance policies have the same basic structure as outlined above, however, there are some coverages that may need to be endorsed or added onto the policy, such as those listed here.
Water / Sewer Backup Coverage
This coverage is not always included, so check to see if it’s there, and choose a limit appropriate to your needs. While the insurance does not pay to replace the sewer line or any of the pluming, it does cover the damage caused by the backup, which can be extensive and costly.
Underground Water & Sewer Line Coverage
There are separate policies we can offer to cover the cost to repair these lines that run from your house to the street, should they become damaged or be invaded by tree roots.
If your home is damaged as the result of a flood, your home insurance policy does not cover the damage. You need a separate flood policy for this type of loss.
If your home is damaged as the result of an earthquake, your home insurance policy does not cover the damage. You need an earthquake policy for this type of loss.
Ordinance or Law
Even if your home is fairly new, check this coverage limit. If you have a loss and need to rebuild the home, there could be additional building construction codes and laws you need to abide by before you rebuild, and this coverage is critical in these circumstances.
Kristie English, M.Ed.
Principal / Agent
Do I need to let my agent know if I list my property on VRBO, AirBNB, Vacasa, or any other short-term rental sites?
Yes, many policies have exclusions for short-term rentals, but can be easily endorsed to accommodate this common business model.
We're here to help you understand the regulatory requirements and best options for protecting your investment property.
Call us at (833) BIG-TREE / (425) 673-7948, or use our online form to request a quote.