Homeowners Insurance for Rental Properties

Joseph Coupal - Monday, April 22, 2019

Lallis and Higgins Insurance, Weymouth, MAAlthough homeowner's insurance covers many of the basic problems that can arise through homeownership, it does not offer the extra liability coverage that is necessary to cover tenants and protect landlords in rental properties. Landlord insurance is designed to offer coverage that more closely fits the needs of a renting landlord. Because of the differences in coverage, the cost of landlord and homeowners insurance differs. You may be able to lower these through certain discounts or tax deductions.


Homeowners insurance for rental properties is actually known as landlord insurance. This type of coverage tends to be more expensive due to the increased risk non owner-occupied homes carry.

Rental Properties are Higher Risk

Generally, insurance providers see the insurance of a landlord’s property which he intends to rent as a higher risk because the policy holder does not intend to reside at the property. The fact that the owner will not be at the property daily presents a greater chance that the dwelling can be damaged or abused in some way – renters have less motivation to take good care of the property. Landlord insurance will cost more for both this higher risk and the increased liability protection that a landlord will need to purchase.

Covers Basic Damage

Most landlord insurance policies cover basic elemental damages, although flood policies and other natural disaster coverage, such as earthquake, must be purchased separately. If the landlord plans to furnish the apartment for tenants by providing appliances and dishes, this is also covered under the insurance but will add to the premium. You can purchased emergency assistance coverage, which helps pay for immediate maintenance needs, and theft, vandalism and liability coverage at an additional cost. These additions are specific to the location and fixtures of your rental property.

Landlord Policy Costs More

A landlord can expect to pay up to 20 percent more to purchase a basic landlord insurance policy versus a standard . However, if you can prove that your rental property will be occupied for a majority of the year, you may be able to negotiate a lower premium. Vacant rentals tend to add to the cost of insurance as there is more chance of damage when a home is unoccupied. Some insurance providers may see the constant habitation as a risk reduction on emergencies, such as a fire which could destroy the property if unnoticed.

Property Tax Deduction

As a landlord, you may be able to use the costs paid for your landlord insurance on a property as a deduction on your overall property taxes. If your insurance costs have been combined with your monthly mortgage payment, the bank should provide you with a Form 1098 which reports insurance costs, along with interest paid, which can be deducted. Owners of a condo property pay their structural insurance costs as part of their membership in the condo association, although the landlord is still responsible for insuring their personal fixtures and liabilities.

Rates Depend on Geography

The location of the rental property can also be leveraged to secure better terms on your landlord insurance. Some policies offer a 25 percent discount on landlord insurance premiums if a landlord can prove that the local fire department is located near a major water source, which could include smaller streams. A further 10 percent discount can be earned if your rental property resides in a gated community. Ask your policy provider about possible discount options that can be applied to your policy. Likewise, the state and neighborhood a home is located can also add to the cost of coverage. Rental property in areas with high theft or crime rates can also cost more.

For more information, contact Lallis & Higgins Insurance.

Source: homeguides.sfgate.com

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