You have the title of landlord. The checklist may be pretty lengthy at times and you may wonder where to start. One of those important landlord responsibilities is securing proper insurance for the property. While your insurance professional can help to make this a smooth process, you have to determine the requirements for your renters. They have to live by your rules if they are living under your roof. No, they aren’t your kids, but they are occupying your property.

Let’s review 10 important landlord insurance requirements to keep your property as safe as possible.

Always require your tenant to carry renter’s insurance.

• Require your renter to carry insurance with a $500,000 limit and make sure they are listed as the certificate holder on the policy.
• Let’s take an example to demonstrate this.
  • Your tenant loves to cook and tonight he is making a magnificent Chinese feast. In the process, the home catches on fire and torches it to the ground. Wouldn’t it be better to have the tenant’s insurance policy pay for the damages and not your own dwelling policy? Clearly, the renter’s cooking mistake caused this claim. They should be the responsible party to cover it.

Always insure the home to full replacement cost.

• This is a very important landlord responsibility!
• Typically, this is higher than the market value of the home. Essentially, it is what it would cost to rebuild the home exactly the same. No better. No worse.
• This would remove any depreciation of claim payments in partial losses.
• If done correctly, the structure can be rebuilt with the same square footage with no out of pockets costs. The rental income will remain the same or may be increased since the dwelling will be brand new.

Always be aware of the vacancy clause. 

• Typically, a carrier will allow the dwelling to be vacant 30-90 days.
• A vacancy that is not documented with the carrier could be extremely costly. This could even lead to partial claims payment, or worse, a full denial of payment in certain cases.
• Call your insurance professional if this occurs to help find a solution.

Understand the vicious dog list and your insurance carrier allows.

• People love dogs. We get it. However, not all insurance carriers share the same view. There is good reason for this though!
  • 4.7 million dog bites occur EVERY year in the United States.
  • 800,000 of those require medical attention.
  • 1 out of every 69 people are bitten each year.
• Millions and millions of dollars are paid out in medical damages for dog bites.
  • If a dog on the vicious list resides in your dwelling and the owner of the dog doesn’t carry a liability policy, you could be on the hook for the bite if it happens on your property.
    • Examples of vicious dogs: pit bull, rottweiler, malamute, doberman pinscher, chow chow, great dane, akita, etc
  • We’d hate to see thousands of dollars come out of your pocket for not disclosing this information or having to file a claim on your insurance when you don’t own the dog. Be vigilant with this question and save yourself a future lawsuit!
  • You may want to consider having a no pet policy to play it safe. Ultimately, it’s your call but it could end up being the landlord’s responsibility.

Never allow a pool, trampoline, or space heater!

• What do these have in common? Ding, ding, ding! You guessed it…expensive claims!
• Pools and trampolines located at rental properties make it harder to find competitively priced insurance options. They also present great liability exposures for the tenant and for you as the owner.
• Heating equipment is responsible for 52,050 claims each year, which have resulted in 490 DEATHS, 1,400 injuries, and over 1 BILLION in property damages. Don’t be cheap! Hire a licensed professional to install the proper heating system that sufficiently heats the space.

Require contractors to provide a certificate of insurance before working on your home.

• This will verify they carry general liability insurance. If they cause damage to your home or cause an accident that hurts someone, you have recourse against their policy and not yours. After all, you’re not the one who caused the damages or injury.
• Verify they have a Workers’ Compensation policy in force. This will insure you are not paying for injuries to the contractor if an injury occurs on your property while working.

Always seek legal advice about putting rental dwellings into a LLC or corporation to remove personal liability from you, the owner. 

Don’t use insurance like it can be bought at your local thrift store.

• Rely on an independent insurance professional to give you coverage suggestions to close gaps in coverage.
• Claims can be costly, and can make insurability of the home extremely expensive. Worse yet, claims could make your property uninsurable. It could cost you, the landlord, thousands of dollars. Just remember to cross your T’s and dot your I’s in all facets of your rental business.

Understand the difference between commercial exposure and personal exposure.

• Multi-family dwellings can be listed on a standard dwelling fire policy.
• If there are more than 4 units in a structure, it likely needs to be insured on a commercial habitational insurance policy. Make sure the insurance carrier and agent are aware of how many units and tenants will occupy the structure. If the property insurance is absent, claim payments could be in jeopardy.

Know that a personal umbrella likely does NOT blanket a commercial policy.

• Talk with your insurance professional regarding options for proper coverage. There are solutions to this issue.
• A personal umbrella policy is an absolute must! It’s the last good, cheap insurance around. You can likely pick up a $1,000,000 personal umbrella for $12.50 a month.
• If you carry a commercial policy, it is also just as important to carry a commercial umbrella to make sure you have adequate liability coverage to cover your exposures. Your insurance professional can help here too!

We know your list of landlord responsibilities is long! Do not take the ones related to insurance lightly. We are here to make that process easy and understandable. Our insurance professionals will make you our top priority. Click on the link below to get the process started to make sure you have the proper dwelling coverage. We look forward to working with you.