Landlord insurance, as its name suggests, is a form of coverage that shields individuals who provide any type of property for rent, such as apartments or condos. This type of policy is different from a renter’s insurance or homeowner’s policy, and generally costs around 20% or 25% more than a homeowner’s policy, per the Insurance Information Institute.
Common Landlord Insurance Claims
There are many different incidents that can lead you, as a landlord, to file a claim against your tenants. Here are the 7 most common landlord insurance claims and how to avoid them.
1. Loss of Rent
According to Terri Scheer Insurance, 53% of the landlord insurance claims filed during the 2014-15 fiscal year were for lost rental income. You can avoid this risk by keeping your properties in good condition in order to minimize the likelihood of man-made events such as smoke and fire-related damages. Rental loss also occurs during economic recessions, including the most recent one brought on by the COVID-19 pandemic, during which, many people struggle to make monthly rent payments.
2. General Liability
This type of claim is filed when a tenant or guest is injured on a rental property. A landlord insurance policy can help you pay for this individual’s medical expenses and any associated legal fees. To avoid liability claims, make sure that there are no hazards on your property, such as slippery surfaces or broken handrails.
3. Water Damage
Water damage to a residence typically arises due to either faulty plumbing or a tenant’s negligence. It is critical to repair water damage promptly, otherwise it can easily spread to other parts of a home, or can lead to mold issues. To avoid facing water damage problems, make a plan to routinely inspect a property’s plumbing, and clearly explain in your lease agreement with the tenant what the consequences are for water damage they cause.
4. Weather Damage
Hurricanes and other storms occur frequently in many states. The heavy winds and rain that characterize these events can sometimes severely damage a home. To avoid such a claim, make sure that all of the downspouts and gutters on all properties are adequately maintained. This can help minimize the amount of damage a roof sustains. According to Remodeling magazine, it costs $18,800 on average to build a new roof, so don’t underestimate the difference these precautions can make.
5. Accidental Damage
There are several types of accidents that can happen in a home. Furniture can be ripped, a TV can be broken or walls and floors can become cracked. You can avoid accidental damage by choosing furnishings that are durable, and installing fixtures such as fans in places where they are least likely to become damaged.
6. Malicious Damage
In some less-common cases, tenants can intentionally damage a rental property. Examples of malicious damage include kicked-in doors and purposely breaking a window. People other than tenants can also damage a property, in which case a claim of vandalism or burglary may be filed. According to Statista, larceny and theft are the most common property crimes in the United States: the FBI reported more than 5 million cases in 2019.
To avoid such incidents, you can install security features including cameras, alarms, additional locks and window grills.
A fusion claim is filed when the motor in an appliance or machine needs repair or replacement after an electrical current causes it to burn out. This is perhaps one of the most difficult types of incidents to avoid, but you can minimize the final payout by carefully evaluating the cost to repair or replace the item’s motor based on factors such as age and depreciation. As always, speak to an experienced insurance agent to help you determine the most appropriate policy.
Speak To The Landlord Insurance Pros
Reach out to the experts at Pro Insurance Group in Northern Illinois to learn more about the most common landlord insurance claims. We are dedicated to serving as one-on-one advocates for each of our clients, regardless of their needs and budget. We always strive to develop and maintain strong relationships with all of our clients.
If you own or rent several properties, it’s highly recommended that you purchase a landlord insurance policy. This type of policy protects both you and your tenants from liability and property damage, including incidents of theft and vandalism. Depending on your location, earthquake and flood coverage may also be available. At Pro Insurance Group, we understand the many risks that landlords face and are committed to shielding you against these events.