What Does Landlord Insurance Not Cover? [Insurance Gaps]

When purchasing rental properties, insurance is essential for financial protection against risks like property damage or liability protection. However, while a landlord insurance policy offers a safety net for rental properties, it does not cover every risk. Understanding what is included in a landlord insurance policy can help property owners avoid surprises and decide whether additional coverage is necessary.

Unlike homeowners insurance, landlord insurance policy coverage primarily focuses on damage to the dwelling, liability protection claims, and lost rental income in certain circumstances. However, exclusions are often tucked away in the fine print. This potentially leaves landlords vulnerable to gaps in coverage. Knowing these gaps can help landlords decide whether they need extra protection to secure their rental investment fully.

We’ll discuss landlord insurance coverage and some common exclusions so landlords can decide if they need extra protection.

Key takeaways

• Landlord insurance covers many risks but has specific exclusions that could leave homeowners and landlords vulnerable.
• Common exclusions include tenant-related damage, rental appliance breakdowns, and certain natural disasters like floods or earthquakes.
• Additional riders or endorsements can be added to a policy to fill coverage gaps, depending on the rental property location and risk factors.
• Understanding these exclusions can help landlords avoid financial surprises and ensure they have adequate protection for unique risks.
• Comparing policies and considering optional coverages is crucial to meet specific needs and minimize out-of-pocket costs.

What is landlord insurance, and what does it cover?

Wondering, “Do I need landlord insurance and liability protection?” First, let’s understand “What is a landlord insurance policy and how does landlord insurance work?” to protect rental property owners. 

Landlord insurance is a specialized form of insurance specifically designed to protect rental property owners from risks associated with rental properties. Unlike standard types of homeowners insurance, which covers homes occupied by their owners, landlord insurance policy offers coverage tailored to landlords’ unique needs.

• Property protection: Covers damage to the rental property, including the building, fixtures, and sometimes detached structures (such as garages or sheds) against risks like fire, vandalism, and certain natural disasters.
• Liability coverage: Provides financial protection in case a tenant or visitor is injured on the property and the landlord is found liable. Landlord liability insurance coverage can help pay for legal fees and medical expenses arising from accidents or injuries on the property.
• Rental income protection: Landlord insurance coverage options include coverage for the loss of rental income if the property becomes uninhabitable due to a covered incident, such as a fire or severe storm. This coverage can help landlords maintain income while the property is under repair.

Despite these protections, landlord insurance policy coverage is not comprehensive. Many incidents remain uncovered or require additional coverage options. 

With landlord insurance explained, let’s delve into what it doesn’t cover and how you can ensure comprehensive protection for your property.

What is not typically covered by landlord insurance?

While landlord insurance policies cover many risks, several scenarios and incidents fall outside the standard coverage. Understanding what is not typically covered by landlord insurance helps landlords prepare for additional costs or consider supplemental insurance.

Let’s look at the typical exclusions in insurance and whether landlord insurance covers tenant damage.

1. Tenant-caused damage

Standard landlord insurance and liability protection policies don’t typically cover tenant-caused damage. If a tenant accidentally or intentionally damages the property, the landlord may be left to cover the repair costs. While some insurance policies may offer limited coverage, this exclusion highlights the importance of tenant screening and deposit collection.

2. Routine maintenance and repairs

Routine maintenance—such as plumbing repairs, HVAC upkeep, or minor electrical work—is not covered. Landlord insurance won’t pay to fix normal wear and tear or structural issues resulting from age. Landlords should budget separately for these ongoing repair costs as they are an expected part of rental property management.

3. Floods and earthquakes

Most landlord policies do not cover damage from natural disasters like floods and earthquakes. If a rental property is in a high-risk area, landlords need to purchase flood insurance and earthquake insurance separately. These types of additional coverage can be critical for landlords whose properties are located in zones with a high risk of natural disasters.

4. Personal property of tenants

While a landlord’s personal property—such as appliances, fixtures, or furniture provided with the rental unit—is typically covered, a tenant’s personal property is not. Tenants should be encouraged to purchase renters insurance, which includes coverage for their belongings.

5. Loss due to vacancy

When a property sits vacant for a prolonged period (typically 30–60 days), vacancy clauses in the policy may void coverage, leaving landlords vulnerable to vandalism or property damage. In these cases, landlords may consider a vacant property insurance endorsement to protect the property during long-term vacancies.

These exclusions highlight the importance of carefully reviewing the landlord insurance policy coverage and considering optional riders to address potential gaps.

What insurance riders can I add to my landlord insurance?

Insurance riders or endorsements are useful add-ons that landlords can purchase to extend their insurance policy coverage. They can help bridge gaps that basic landlord insurance policies don’t cover, especially for high-value or high-risk real estate.

Some common landlord insurance riders include:

• Loss of rent rider: The landlord insurance loss of rent rider can cover rental income if the property becomes uninhabitable due to certain unforeseen events, such as severe storms. For landlords, securing a loss of rent rider provides protection against the risk of income loss due to property damage.
• Natural disaster coverage rider: This is essential for landlords whose properties are in areas prone to natural disasters like floods or earthquakes. Adding a disaster coverage rider can help landlords avoid significant financial loss from property damage due to natural events.
• Vandalism protection rider: Protects the rental property against intentional damage caused by trespassers or tenants. While landlord insurance policy may cover minor vandalism, a rider can provide extended protection, especially in areas where vandalism risk is high.

Adding insurance endorsements and riders can be a strategic way for landlords to customize their insurance policy, addressing specific vulnerabilities based on their rental property’s unique circumstances.

Landlord insurance cost and what affects it

What is the landlord insurance policy cost influenced by? Landlord insurance costs vary widely, depending on factors such as property location, size, condition, and the insurance company you choose. Premiums also fluctuate based on the level of insurance policy coverage. Generally, the more extensive the coverage, the higher the landlord insurance cost.

Umbrella policy options can also increase costs but provide additional liability protection coverage.

The following factors may affect the cost of landlord insurance:

• Property location: A rental property located in a high-crime or disaster-prone area will generally have higher insurance premiums. For example, coastal properties might incur additional costs for flood coverage.
• Property value and size: Larger and more valuable properties tend to have higher premiums. The cost to insure a multi-unit complex will likely be higher than for a single-family rental.
• Type of coverage: Adding endorsements or riders to cover risks, such as personal property protection or vandalism protection, will also increase the overall insurance cost. The more comprehensive the landlord insurance policy coverage, the higher the premium will be.
• Claim history: A rental property with a history of frequent claims might also result in higher premiums, as insurers may view them as higher risk.

Understanding these factors can help landlords manage their insurance expenses effectively and make informed decisions when comparing policy options.

Still have questions?

Below are some common questions to address any remaining uncertainties about what is not covered by landlord insurance:

Does landlord insurance cover negligence?

No, landlord insurance generally does not cover damages resulting from negligence by the landlord. For example, if a landlord fails to maintain a safe living environment and this results in damage or injury, the policy likely won’t cover the costs. Always ensure properties are well-maintained to avoid such gaps in insurance coverage.

Does renters insurance cover loss of food?

Renters insurance typically does cover loss of food in situations like a power outage, but this applies to tenants, not landlords. Tenants are encouraged to obtain a renters insurance policy to protect their belongings, including perishables, during power disruptions.

What are three things that renters insurance typically does not cover?

Renters insurance does not typically cover the following three kinds of damages:

• Flood damage: Like landlord insurance, renters insurance often excludes flood damage. Flood insurance is a separate policy that tenants may consider if they live in high-risk areas.
• Earthquake damage: Earthquake coverage is usually not part of standard renters or landlord insurance and must be purchased separately.
• Damage to landlord’s property: Renters insurance policy doesn’t cover the landlord’s personal property or building structure; it only covers the tenant’s belongings.

Does landlord insurance cover natural disasters?

Standard landlord insurance policy generally excludes coverage for natural disasters such as earthquakes and floods. Landlords may need to purchase additional coverage or specific riders if they wish to protect their rental properties against these events.

Does landlord insurance cover appliances?

Landlord insurance typically does not cover appliance damage unless it is caused by a covered event like a fire or storm. Routine breakdowns are also excluded. To protect appliances, landlords may need to purchase a home warranty or add a specific rider to their policy.