Does landlord insurance cover damage by tenants?
4 minute read Published on Jul 19, 2024 by BrokerLink Communications
Renting out rental properties is a great way to generate a secondary passive income throughout the year. And with the right tenants, you can have peace of mind knowing your personal property is in good hands throughout the year.
That being said, being a landlord comes with several unique hazards that can put your investment in jeopardy if you don't protect yourself with the right landlord insurance.
So, what exactly is this type of dwelling coverage, and do landlord insurance policies provide coverage when your tenant damages your home? Stick around to find out more!
Does tenant insurance cover damage to your rental property?
Tenant insurance, also known as renters insurance, will mainly cover losses related to the tenants themselves rather than the physical structure of your rental property.
This includes personal liability coverage, additional living expenses coverage, damage to the renter's belongings, and any other additional insurance policies they wish to add.
What is the difference between landlord insurance and tenant insurance?
Landlord insurance and renters insurance may appear to be similar, but in fact, they serve different purposes and protect different aspects of the rental property. Here is a closer look at the differences between the two:
Who the insurance provider will protect
Landlord insurance protects the owner of the property and their investment into said property. This includes lost rent, personal liability, and property damage. In contrast, tenant insurance is meant to protect the renter's personal belongings and safeguard them from personal liability.
What landlord insurance covers
Landlord insurance covers the actual physical structure of the rental property and any liability associated with the property. For example, if you injure yourself on the property, landlord policies will pay for any lawyer fees, medical expenses, damage to property, and other costs.
Again, tenant insurance offers protection to the tenant’s personal belongings from fire damage, water damage, and other covered risks mentioned in their policy. Similar to landlord insurance, liability coverage protects the renter if a guest injures themselves in or on your rental property.
Loss of income vs. additional living cost
Landlord insurance can cover loss of rental income if the property is unlivable due to a kitchen fire, vandalism, and other physical damages, while tenant insurance can cover additional living expenses if they need to move out temporarily due to the damage that was caused to the rental unit.
Are you liable for accidental damage?
No, you will not be held liable for any accidental tenant damage that is caused to your personal property or the physical structure of your rental space. Here are some things to keep in mind:
Accidental damage caused by landlord neglect
Landlords are the ones responsible for maintaining their rental property. In other words, it is their job to keep the property in a safe and livable condition.
If they are unable to keep the rental space in a safe and livable condition, and this essentially leads to accidental damage, they can be held liable for the repair costs.
For example, if a landlord neglects a plumbing leak that is reported to them by the tenants and a pipe bursts and causes water damage to the space, the landlord could be held accountable for those damages. This is because the landlord did not keep the property in good condition.
To avoid unnecessary damage, you, as a landlord, should conduct regular inspections of your property to ensure that it remains in good condition throughout the term of the lease agreement. It's also important to outline in the agreement who is responsible for what costs so each party understands the expectations of one another.
Can a landlord insist on tenant insurance?
Even though renters insurance is not mandatory in Canada, many landlords will ask you to purchase renter's insurance as a condition of your rental agreement. Renters insurance helps protect your interests as a renter.
In the event of a covered loss, you won't be responsible for paying the cost of lawyer fees, repairs or replacements of your personal belongings, or any additional costs that you incur if you are unable to live in your rental unit due to property damage.
Ultimately, having your own insurance as a renter is an affordable investment that offers significant protection.
Does landlord insurance cover intentional damage?
No, your landlord insurance coverage will not offer protection if the tenant damage is intentional. For example, if they intentionally set a kitchen fire, spray paint on the walls, or cause any other damage.
That being said, if a tenant accidentally damages your property when renting, you, as a landlord, will be covered for any repairs, replacements, and loss of rental income.
It's also important to note that accidental damage caused by the landlord's inability to properly maintain the property, such as regular wear and tear will not be covered by your landlord coverage.
For a comprehensive list of what is and isn't listed in your landlord coverage, we recommend reaching out to your insurance company. They will be able to go over your coverage with you so you can have a better understanding of whether there are any shortfalls in your coverage.
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