A landlord home insurance policy may or may not cover the actions of renters. This determination is based on the coverage limits set in the landlord home insurance policy and whether damages caused by a renter or tenant are covered under the standard policy procedures or as a special rider or endorsement to the policy.
Home Insurance for Landlords
A landlord who owns a homeowner insurance policy that covers their property is usually covered against loss that occurs from those risks associated with damages or theft. A landlord may also add fire and flood insurance as separate policies in the case where such damage may be caused by fire that is not covered in a standard policy or floods, which is only required of those individuals who live in a designated flood zone.
Tenants as a Risk
Tenants represent a separate level of risk for the landlord and the insurance company issuing the home insurance policy may require additional coverage and that certain conditions be attached to policy regarding the activities of renters. If this addition or change has not been made to the policy by the landlord, it is highly unlikely that coverage has been extended to cover the actions taken by a renter.
This oversight will result in any losses becoming the responsibility of the landlord. In many cases landlords have little recourse or opportunity to go after a former tenant in order to recover any loss experienced as a result of the tenant’s actions. These damages can end up costing the landlord several thousands of dollars and prove to be costly.
Home Insurance Policy Review
The best way to determine whether the landlord’s policy covers a renters’ action is for the landlord to conduct a policy review with their insurance agent. This is especially important to new landlords who may not be fully aware of what is and is not covered under their policy as a landlord. This coverage review will help the landlord understand what limitations are in their plan and make necessary changes in order for the landlords to protect themselves against loss.
Reducing Loss Exposure
A landlord can charge a security deposit in an amount sufficient to offset some of their loss exposure when renting. This may help lower premiums and make the coverage that they acquire more affordable. Adding a rider to cover renter actions certainly makes sense. A landlord’s home insurance policy may not cover the actions of their renters should a claim arise.