What Is Landlord Insurance?

Landlord insurance protects owners of rental properties from lawsuits for bodily injuries and property damages occurring on leased premises. Landlord insurance also protects a rental property owner's actual investments if rental properties are damaged or destroyed. Landlord insurance is available for individuals who own rental properties and for businesses, such as property management companies.

Negligence

Landlords can face lawsuits if their carelessness leads to injuries, deaths or property damage. For example, a landlord may be sued if she ignores a dead tree limb and it falls on a tenant's car or if a broken step causes a slip and fall injury. Generally, landlord insurance pays for medical bills, settlements and judgments for damages stemming from negligence claims. Landlords should immediately notify their insurance carriers of accidents involving bodily injuries or property damage at their rental units.

Defense Costs

Landlord insurance generally provides and pays for defense attorneys to represent landlords in personal injury and property damage cases. Besides the cost of an attorney, the defense in such a case might have to pay for depositions, expert witnesses, court fees and medical examination fees. Even frivolous claims that don't result in compensation for damages can cost thousands of dollars to fight. Landlord insurance provides protection against the financial burdens of litigation.

Landlord Property Protection

Landlord insurance also covers losses if rental properties, and their contents, are damaged or destroyed by fire, vandalism and accidents. Special riders may be required for certain occurrences, such as hurricanes and floods. Landlord insurance coverage can be based on a property's market value or its replacement cost. Market values and actual rebuilding costs can vary, so landlords should discuss their different options with their insurance carriers and make sure they understand what's covered and what's not.

Lost Rental Income

Rental income protection can also be part of a landlord's insurance coverage. This replaces lost rental payments if tenants are forced to move out of leased property because of damage or destruction. Rental income protection generally is limited to the time it reasonably takes to repair or rebuild the inhabitable rental property. For example, a common policy may cover lost rental income for up to 12 months.