Why is landlord insurance so important now?
9 Dec, 2021
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Why Landlord Insurance Is More Important Now Than Ever Before

Landlords are facing more challenges today than they have in decades. Not only are you faced with the problem of finding and keeping good tenants, but you also have the added strain of missed rental payments from perfectly good tenants due to the pandemic.

However, pandemic aside, your landlord insurance is more important now than ever before. Here’s why.

Lost Rent

Landlords are investors. You invested in a rental property to supplement your income, or to help cover the costs of your property. Today, having long-term renters doesn’t ensure your rent is paid on time or at all thanks to COVID-19.

However, something you might not have considered as a landlord is an increased risk for lost rent. If something happens to your property so your renters can’t live there, an insurance policy pays for that lost rent. Depending on the type of landlord insurance you have, you can receive rent until your property is in livable condition again.

Why is this so important today? Climate change. Many cities’ and towns’ infrastructure are suffering from the stress of severe weather. This increases the risk for flooding. As well, severe weather can cause other types of damage due to higher winds, hotter summers, and more.

All of these things place added stress on your properties, which can lead to higher risk for issues from floods to fires. Increased crime is another reason you want insurance to cover lost rent. If someone breaks into the unit and vandalizes it, the tenants might not be able to live there until repairs are completed.

Short-Term Rentals

If you’ve chosen to rent out your own home or other properties as short-term rentals, you could be in trouble. Insurance is designed to cover properties used for a specific purpose. If you aren’t sharing information with your insurance company about short-term renters, chances are you won’t be covered if something happens when renters are occupying the space.

This includes rooms in your own home if you decide to have a makeshift bed-and-breakfast. Always make sure you understand how your insurance works, and whether or not you require landlord insurance in any of these scenarios.

Liability Insurance

There is a long list of issues that could lead to lawsuits when something occurs on your property. For example, if you own a house that you rent out to tenants and they fail to shovel the sidewalk and walkways, then you are liable if someone slips and injures themselves. Even if your lease says the tenant must shovel the ice, you can still be held accountable for medical expenses.

However, such scenarios might fall under property damage as opposed to a personal injury. For example, a tree branch that falls onto someone’s car, including your tenant’s vehicle, could find you on the hook for repair costs for the damage the branch caused. Liability insurance with your landlord insurance can cover these costs.

Furnished Units

This often ties in with short-term rentals, but can apply to any rental unit where you provide furniture. Kitchen appliances are a perfect example. If you don’t have landlord insurance for furnished units, you might not be covered if the items in the unit are damaged.

Other examples might be items you store in the basement of the building, and maintenance equipment for the property such as lawn mowers. Landlord insurance can include your belongings to keep you from losing money should a covered peril occur that causes damage such as fire, flood, or vandalism.

Secondary Suites

Last but not least, if you have a secondary suite in your home rented to tenants, you could run into insurance issues if you try to make a claim on your home insurance. Several factors impact insurance when it comes to secondary suites including:

  • Bylaws: If your suite isn’t legal according to municipal bylaws, this can cause serious issues should an event occur and you need to file a claim. If the issue started in the basement unit, for example, and the unit is not up to code, it could lead to rejection of insurance coverage in your own space. As well, if your unit is not registered, or your insurance company was unaware of the rental unit, your home insurance might not cover the event. Even if your suite is legal, and you failed to tell your insurance company about the tenancy, chances are you won’t be covered.
  • Null and void: As mentioned above, your own policy could be deemed null and void if the damage to your living space was caused by the rental. If you tell your insurance company about the rental unit, keep in mind they might still choose not to cover your home. They need to assess the secondary unit for risks to determine if they can insure the property. As well, they might raise premiums if they find the space has issues and poses a risk. It is always best, therefore, to inform your insurer before deciding to rent a secondary unit to avoid claim denials.
  • Tenant changes: Another thing many landlords don’t realize is that if you change your tenant, you could face issues with insurance due to the new tenants. Be sure you inform your insurance company if you change tenants to make sure this doesn’t lead to claim denial.

Although your home insurance policy might include renter suite damage, such as a burst pipe, it is always best to check with your insurer. As well, don’t forget about the liability we discussed above, as your tenant might sue you if they are injured due to unsafe conditions in the secondary suite.

Tenant Insurance vs. Landlord Insurance

Landlords might also want to strongly recommend that their renters have tenants’ insurance to live in their units. This makes it clear that their belongings will not be covered should an incident occur. As well, something that happens on the premises such as an injury that is the fault of your tenant will be easier to manage, as damages will be covered by their insurance.

As a landlord, understanding your obligations and the type of landlord insurance available is the safest way to avoid being out of pocket when damage occurs. For more information, speak to our team at W.B. White Insurance today.

Amanda began her insurance career in 2000. As a Chartered Insurance Professional (C.I.P.), Amanda is passionate about continued education for insurance professionals. Amanda teaches the Insurance Broker Licensing program through Durham College, and speaks about insurance related topics at B2B events.

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Oshawa Office 110 King Street East
Oshawa, Ontario, L1H 1B6

Lindsay Virtual Office