Owning a rental unit comes with a number of administrative responsibilities. One aspect that's often overlooked is insurance. A rental insurance policy helps protect landlords against losses associated with the unit, whether that's a basement suite in the family home or a stand-alone unit in a separate building.
Landlord's insurance shares some aspects with regular home insurance, but there are important differences. Here's what you should know when you're looking for a policy, including where to get the best rates.
What's Included in Landlord's Insurance?
At its most basic, landlord's insurance covers the structure of the unit and rental income. That means you can usually claim for damage due to fire, water, or other covered perils. You can also get back some of the rental income you lose while repairs take place.
Additional add-ons may include liability for those injured in the suite, theft of items owned by the landlord, vandalism, or loss of rent if a tenant passes away.
What's Not Typically Covered?
Landlord's insurance won't cover items in the unit that belong to the tenant. It also typically excludes wear and tear damage as well as losses due to insects and rodents. As with your personal home insurance policy, you probably won't have coverage for earthquake or overland flooding damage, unless those are add-ons offered by your insurance company.
When you take on new tenants, you may want to suggest they buy tenant insurance. Renters are not legally required to do so, but this gives them added protection for losses they may suffer. Having this friendly conversation at the start of the tenancy might give you both some peace of mind.
