Insurance Needs for Rental Properties

For individuals or families who are considering investing in a rental property, or considering renting out their residence, whether for short-term or long-term rental needs, becoming familiar with landlord insurance is important.

Landlord insurance, also referred to as rental property insurance or investment property insurance, protects your property if you experience a fire, storm damage, or another type of property loss.  Landlord insurance covers damage to the structure of a rental property but does not protect a tenant’s personal belongings (tenants would need to obtain their own separate renter’s insurance for their possessions.)

While landlord insurance and homeowner’s insurance both provide liability coverage, the liability coverage in landlord insurance is designed for the increased risk of lawsuits that landlords face.  Because of this additional risk, as well as the increased likelihood of a homeowner having to file some type of insurance claim, on average, landlord insurance costs about 25% more than a standard homeowner’s insurance policy. 

In South Carolina, standard landlord insurance covers the following: 

  • The rental property/building, plus structures like a garage or shed.  Property insurance protects against damage caused by fire, lightning, wind, hail, ice, and snow.
  • If someone is injured on your rental property, liability coverage helps with affiliated medical treatment, property repairs, and legal costs.
  • If a tenant must vacate the premises so that the landlord can make necessary repairs after a fire, storm, or another covered hazard, landlord insurance assists with lost rental income.

In South Carolina, the law does not require homeowners to purchase landlord insurance for their rental property, although it is advisable since it provides additional protections against the risks of renting out a property.  The law also does not require that a tenant purchase renter’s insurance for their personal belongings. Landlords can choose to require their tenant to purchase and show proof of renter’s insurance, which can help prevent future legal disputes from arising.  This would need to be clearly outlined in the terms of the lease agreement, which would be signed by both parties.

Intentional damage to a rental property by a tenant will not be covered by landlord insurance.  Landlords are advised to purchase an additional vandalism coverage rider if they anticipate this type of damage could arise during the term of a lease agreement.  If a tenant causes accidental damage to any part of the rental property, this is normally covered by landlord insurance.  Landlord insurance additionally covers any appliances that could be damaged by a tenant accident, like a cooking fire in a kitchen, but typical landlord insurance does not cover the normal wear-and-tear to appliances.

Landlord insurance premiums will vary based on the size of a rental property, its age and construction type, as well as the weather and crime risks in the area that it’s located.  Having sprinklers, an alarm system, gated entry, or other security measures may possibly lower the landlord’s insurance premium.

If you are considering investing in a rental property, or considering renting out your residence, the agents at Gill Insurance are available to help you navigate and understand landlord coverage options. We work with multiple insurance companies to help find you the most protection at the best rate possible.  Give us a call or come see us today!

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