Landlord insurance: Do you need it?

Renting out an investment property to tenants is a popular way to earn extra income. There are plenty of decisions to make during the rental process, many of them regarding how to fix up the space or who to rent to. However, it’s important to remember to protect yourself and your assets before new lessee moves into your property.

What is landlord insurance?
For the most part, you can expect tenants to be courteous to you and your property. This means they’ll pay the rent on time, keep the home in good repair, and avoid causing major damage. But, of course, there is always the chance that the residents won’t have the respect you expect for your investment property.

Like any investment, there are financial risks that come with letting a home out to tenants. Because of this, many owners opt for landlord insurance, which is a type of policy that covers investment properties. It protects against myriad risks that landlords may encounter:

• Theft or burglary: Whether it’s your tenants, their guests, or anyone else, your property is protected against theft.
• Damage of vandalism: If something is broken or destroyed by your tenants or their guests, landlord insurance can cover the repairs.
• Broken leases: Though your tenants likely signed some kind of lease agreement, there is always the risk of them failing to pay the rent or breaking their contract, which is why landlord insurance protects against your possible loss of income.
• Eviction: In some instances, whether that’s a failure to pay rent or another breach of contract, you may have to evict your tenant. This process is time-consuming and can be expensive, so landlord insurance will help cover the legal expenses.

In addition to the damage that residents can do to the space, there are always the dangers that come with any property: fires, floods, and other natural disasters. Depending on the policy you choose, your landlord insurance may protect you against such events.

Do you need landlord insurance?
You can be as thorough as you’d like when you’re vetting your potential lessees, but it’s impossible to foresee the future. Whether they experience job loss or another emergency that keeps them from being able to pay the rent, or they invite more reckless guests over who could do physical damage to your property, it’s always a good idea to protect yourself and your assets with landlord insurance.