Landlord Insurance: Finding the Right Coverage for Your Rental Property

Hoffman Hanono
January 15, 2022

Rental properties are a great way to earn passive income. But if there’s one thing landlords shouldn’t be passive about, it’s protecting their investment. When you hand over the keys to renters, you open yourself up to risks, including property damage, eviction, loss of rent, and more. You can mitigate these renting pitfalls by making sure you have the right landlord insurance policy. As you shop, consider the following.

Basic Protection

The most basic building protection plans cover fire damage and vandalism. Add-ons are available for those who wish to protect their rental property against additional hazards like windstorms, hail, water backup damage, and earthquakes. More comprehensive plans are available and cover all liabilities, except those not specifically listed in the insurance plan. Landlord building insurance is similar to a standard homeowner’s insurance policy. The cost is contingent upon the value of the rental property and the comprehensiveness of the plan.

Content and Systems Protection

Landlords are responsible for ensuring their rental property is habitable. In other words, you must maintain the structure to ensure safety and make sure systems like the plumbing, heating, cooling, and electrical are in working order. Most insurers offer optional protection plans that cover broken or damaged HVAC systems, water heaters, and other systems. These plans allow you to replace damaged items with new ones of similar quality.

When it comes to a tenant’s belongings, if you rent your property unfurnished, California does not require that you have insurance to cover those items.

California tenants are also not required to carry renters insurance, although many landlords do require it. It’s considered a good practice to encourage renters to get coverage—the cost is negligible and covers all personal property in the event of fire, accident, or theft.

Loss of Rent

Life happens. Sometimes tenants are forced to vacate because of a fire or other unforeseen damages. The good news is that most landlord policies reimburse lost rental income in events like these. Keep in mind, though, that insurance only kicks in if the property suffers damage due to a primary insurance event. Loss of rent insurance does not cover you in the event of eviction or a tenant breaking lease without giving appropriate notice.

Personal Liability

California law states that landlords are liable for any accidents on properties that are neglected or not up to code. Personal liability insurance protects you against lawsuits brought by tenants injured on the property. It also covers your legal costs if your tenant ignores eviction notices or sues you for breach of contract.

Insure Your Rental Property—But Don’t Stop There

Landlords are advised to carry comprehensive insurance to protect themselves, but also to treat their rental as a business. Galvanize your protection plan by being preemptive. Learn the basic requirements for maintaining your rental, and ensure that it is safe by scheduling quarterly walk-throughs. According to California Civil Code Secs. 1929, 1941, which outlines the conditions that make a building fit for human occupancy, your property should have:

  • Watertight construction
  • Working plumbing and gas
  • Hot and cold running water
  • Well-maintained heating facilities compliant with the law at the time of installation
  • Well-maintained electrical lighting compliant with the law at the time of installation
  • Grounds kept free of debris
  • Sufficient trash receptacles
  • Well-maintained floors, stairways, and railings
  • Deadbolt locks on each main swinging door and windows that lock

Get the Right Coverage for Your Rental Property

Hoffman Hanono has offered affordable insurance solutions since 1959. Lean on our experience, and we’ll help you find a comprehensive policy that fits your budget and needs, no matter what they are. Contact us today to learn more.