Before you hand over the keys to your income property, it would be a good idea to protect your investment with landlord insurance to cover not only the premises you are renting out, but any of the appliances and furniture you are including with the rental. Protection from possible lawsuits is also wise as a landlord, as you could be held responsible for accidents or mishaps tenants have on your property.
Did you know?: Most insurance companies won’t insure your rental property if your tenants don’t have their own tenants insurance.
If you rely on monthly income from your tenants to make ends meet, rental property insurance can also provide a financial safety net for you. In this case, standard homeowner’s insurance would not cover you for lost income. If your rental unit becomes uninhabitable due to a fire, for example, it can take months before the restoration is completed and the tenants move back in. Coverage to replace lost rental income could be crucial if your own income depends on it.
Every type rental property has different type of risks and recommended coverage. Depending on the number of tenants and/or rental properties you have will determine the possible risks you may face and the protection you need.
For example, a family renting a home is considered a different type of risk than a student renting a room for the school year. Short-term arrangements are often considered riskier than long-term ones, and the screening method used by the landlord can also play a role in how a landlord policy is written.
Taking on tenants increases your risk for financial loss, and you need the right insurance to offset that risk. Be sure to discuss your specific needs with your broker to make sure that you get the insurance that fits your specific situation.
It is possible that your existing homeowner’s property insurance will allow you to purchase a rental endorsement, depending on who is renting your property. Most insurance companies require that one family only is occupying the rented dwelling. Other combinations of tenants such as a number of unrelated students can also be acceptable under certain conditions but should be discussed with an insurance professional. The downside of covering your rental property under your own homeowner’s policy is if a claim should be made regarding the rental property, this could negatively affect your homeowner’s insurance rates and availability.
What are you getting when you pay for landlord insurance? Most landlord insurance policies are customized to meet the needs of the client, but there are some common coverage options that help to protect landlords from financial disaster. Those clauses include:
Your landlord insurance does not cover the possessions and belongings of your tenants or provide them with liability coverage, so it would be good advice to suggest they consider tenant’s insurance. If their furniture, clothes, TVs, computers and other belongings are ruined by fire or water damage they caused or another uninsured tenant caused, your insurance does not cover them. When your tenants start adding up the value of their possessions, they might want to look into getting their own renter’s insurance.
Learn more about what's covered by home insurance in Ontario.
If you have any questions or would like a no obligation landlord insurance quote, please call Mitchell & Whale Insurance Brokers at 1-800-731-2228 or email us at firstname.lastname@example.org. We’d be happy to help!