Protecting Your Investment: What Every Landlord Needs to Know About Insurance

Owning rental property can be a smart financial move—but only if you have the right insurance coverage. Standard homeowners insurance won’t protect you when you’re renting out a property, so securing a proper landlord insurance policy is essential. But not all policies are created equal. Here’s what you need to consider to ensure you’re fully protected.

1. Property Coverage: Protecting the Structure Itself

Your rental property is a valuable asset, and a landlord insurance policy should cover damage to the structure from risks like:

  • Fire, smoke, and explosions
  • Windstorms, hail, and lightning
  • Vandalism and theft
  • Water damage (excluding floods)

📌 Tip: Make sure your policy covers the replacement cost, not just the actual cash value. The cost to rebuild may be significantly higher than the market value of your property.

2. Liability Insurance: Covering Lawsuits & Tenant Injuries

If a tenant or visitor gets injured on your property, you could be held liable for medical bills, legal fees, and damages. Liability coverage protects you from lawsuits related to:

  • Slip-and-fall accidents
  • Faulty property maintenance (e.g., broken stairs, unsafe wiring, uneven flooring)
  • Dog bites or other injuries caused by pets on the property (IF your dogs are covered as part of your homeowners policy. You should disclose your dog’s breed and age to your agent at the time of policy purchase to ensure your carrier will cover liability related to your dog(s).)

📌 Tip: Consider at least $1 million dollars in liability coverage to safeguard your assets, especially if you own multiple rental properties. Otherwise, consider obtaining a $1 million dollar umbrella policy that will increase the liability limit of your home. 

3. Loss of Rental Income: When Your Property Becomes Uninhabitable

If a fire, storm, or other covered event makes your rental unlivable, you won’t be collecting rent—but your mortgage, taxes, and maintenance costs won’t stop. Loss of rental income coverage helps replace your lost rent while repairs are being made.

📌 Tip: Check your policy’s coverage duration—some policies will only reimburse lost rent for a limited time.

4. Tenant-Related Risks: What’s Covered and What’s Not

Landlord insurance protects your property, but it doesn’t cover your tenants’ personal belongings. Encouraging (or requiring) tenants to carry renter’s insurance ensures their possessions are protected and reduces potential disputes.

Additionally, some landlord policies offer optional coverage for tenant-related risks, such as:

  • Tenant default insurance – Covers lost rent if a tenant stops paying
  • Vandalism by tenants – Protects against intentional damage
  • Legal fees – Helps with eviction-related costs

📌 Tip: Screening tenants properly and requiring renter’s insurance can reduce your risk of costly claims.

5. Additional Coverages Landlords Should Consider

  • Flood Insurance – Standard policies don’t cover flood damage, so if your rental is in a flood-prone area, a separate policy is a must.
  • Earthquake Insurance – If your rental is in a seismically active area, consider adding earthquake coverage.
  • Umbrella Liability Policy – If you own multiple rental properties or have high-value assets, an umbrella policy provides extra liability protection beyond your standard landlord policy.

📌 Tip: Work with an insurance expert to identify the specific risks for your rental location.

The Right Coverage Saves You Money & Stress

As a landlord, having the right insurance policy is just as important as having reliable tenants. Protecting your investment with a comprehensive landlord insurance policy ensures you’re covered for unexpected property damage, liability claims, and income loss.

At ArcLight Insurance, we specialize in helping landlords find tailored coverage that fits their needs. Contact us today for a free policy review and ensure your rental property is fully protected.