What is the purpose of landlord insurance, and how does it differ from traditional homeowner’s insurance? Unlike a homeowner’s insurance policy, landlord insurance rarely protects individual objects inside the dwelling (tenants who wish to protect their furnishings should purchase their own renter’s insurance). Instead, landlord insurance has two principal components: liability coverage and property protection. Break-ins, injuries on the property, and certain kinds of natural disasters can all be covered under a typical St. Louis landlord insurance policy—but knowing which questions to ask of insurers is essential.
Property Protection
For example, property protection does not include regular wear and tear, which should be covered by a tenant’s security deposit. However, if a fire breaks out, or a burglar destroys a window casing during a break-in, landlord insurance can help pay for the structural damage. The cost of items stolen via theft, however, is usually not covered by this type of policy—again, these costs would likely be recouped from renter’s insurance. For landlords wishing to protect valuable or rare items that are included within their rental property, such as a classic stove or a stained glass window, special additional theft coverage will likely need to be added. Likewise, landlords who are considering renting fully furnished units (ie: Airbnb, Vrbo, & Furnished Finder) should ask if they can purchase coverage for their furniture within the unit, as it is unlikely to be automatically covered.
Natural Disasters
While “storm damage” is a fairly ubiquitous area of coverage, it’s worth noting that in Missouri, many insurers do not include lightning, flood, tornado, or other severe weather damage within this category. When purchasing a policy, it’s wise to ask what storm damage specifically covers, and if there are any types of natural disasters that do not fall within this definition. Because of the proximity of the Mississippi River and the prevalence of tornadoes in St. Louis, high wind and flooding damage is not uncommon. Another technicality: damage from water and sewer backups is rarely covered because problems with those systems are considered to be part of ordinary property maintenance. When purchasing insurance, ask what the policy will cover if severe weather causes damage to an otherwise well-maintained water system.
Liability
The liability portion of this type of insurance, meanwhile, shields landlords from the financial consequences of accidents on their property for which they are found to be responsible. For example, if the poorly maintained staircase handrail suddenly gives way, causing a tenant to fall and injure themselves, landlord insurance can help defray any costs associated with a lawsuit or medical bills.
Odds and Ends
Landlord insurance also has a few odd exceptions: for example, if a landlord lives in the same building as their tenant, they may not be eligible for a policy. Traditionally, only “non-owner occupied” spaces qualify for landlord insurance. Also, while structural damage due to break-ins is often covered, damage due to vandalism frequently is not. The cost of meeting new building code requirements when an older unit is being renovated is also typically not covered by this policy.
While all of these exceptions and add-ons can initially seem overwhelming, landlords who understand how to ask for what they need can create an insurance policy that specifically protects their rental property from almost all types of harm.