Property Management Brainstorm
Five Minute Friday #3 - Insurance Coverage for a Rental Property
Nov 8, 2019 · 6 min
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In this Five Minute Friday, Bob discusses the proper insurance coverage that a landlord should have at his rental property before placing a tenant. With Long-term Rentals (typically unfurnished, rented under a 12-month lease) there are two types of insurance policies that should always be required.

The first type of insurance is a “rental dwelling” policy:

  1. The rental dwelling insurance policy should be a minimum of $1,000,000 public and premises liability insurance. 
  2. Rental dwelling policies usually cost less than homeowner policies because the owners personal belongings are typically moved out of the home and do not need to be covered.
  3. The rental dwelling designation is critical if the house were to become uninhabitable. In such a case, the insurance would pay the property owner’s lost rent during the rebuilding period.
  4. Property managers will require current proof of a rental dwelling insurance policy to be on record in their office and will likely want to be named as additionally insured (this is standard procedure with insurance companies).

The second type of insurance is renter’s insurance, obtained by the tenant, to protect their personal belongings and provide for tenant liability coverage. 

In addition to protecting the tenant’s belongings, renter’s insurance protects the landlord from large scale incidents cause by tenants and would also pay for temporary housing for the tenant if the home is uninhabitable.

There are a few derivatives of these insurance policies which may need to be considered:

  1. If the property is rented furnished. 
  2. If the property is a short-term rental (vacation rental). 
  3. Traditional renter’s insurance is not practical with a short-term rental. 

Links to References Mentioned:

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