Find Best Landlord Insurance Companies in Chicago

Insurance companies consider tenant occupied properties to be a higher risk for damage than owner-occupied properties. In addition to normal property damage coverage, a landlord insurance policy on a rental dwelling can also cover damages caused by tenants. Landlord insurance on a rental unit provides greater liability coverage for medical and legal costs if the tenant or their visitors become injured on the leased property. Other coverages that are specific to investment property may include lost rental income or even guaranteed income if your tenant should default.

A landlord insurance policy should cover property damage, landlord liability, and loss of rental income. Some policies don’t include rental loss as standard, so be sure to ask. Property damage coverage includes the usual causes like weather, fire, and electric or gas failure. It should also cover rental home contents such as appliances. It will not cover the tenant’s possessions. Vandalism should be included as standard coverage. Liability coverage will protect you if someone is injured on your property. Some renter’s insurance will cover liability for injuries to their guests which could benefit you. You may want to require that your tenants carry renter’s insurance. Loss of rental income coverage applies if there is a tenant default because the property becomes uninhabitable, such as when there has been a fire. You can also add rent protection coverage called rent guarantee insurance that will pay you if your tenant doesn’t pay their rent.

Surveys of homeowner’s insurance companies for landlords and insurance brokers consistently show that landlord insurance costs 20-25% more than homeowners insurance. The average price for a landlord insurance policy in the USA should be between $1,300 and $1,400 annually. Your quote will depend on a number of factors including known risks in your area such as hurricanes, the age, and condition of your property, lower rates for multiple rental properties, and security systems installed by a professional.

What is the usual purpose of the property? If you want to rent your personal home when there is a one-time event in your location, such as a political convention or sports tournament, your homeowners insurance company may allow it under your current policy. If you own the property solely to generate income, such as a rental home or residential building, you will need landlord insurance. The special coverages available through a landlord insurance policy will benefit an investment property owner, and the premiums are deductible as a business expense.

There are different types of landlord insurance with various levels of protection and valuation methods. You will most likely need the help of an insurance professional to decide which one is right for you. Here are some of the things that you should consider. What is covered? A Named Peril policy only covers damage from causes that are specifically named. It may only cover fire. An Open Policy covers any damages that are not specifically excluded. The valuation of your covered damages is very important. The Actual Cash Value method values items and structures at their actual value at the time of the damage. This may not cover the cost of replacement. A Replacement Value policy will pay the cost of replacement of your property. A Special Dwelling Property Insurance or DP-3 policy is what is typically referred to as Landlord Insurance. This is an Open Policy that uses the Replacement Value method.

Insurance companies vary on how they treat damage caused by tenants. It may depend on whether it was accidental damage or intentional, or malicious damage. Some policies will cover accidental damage caused by a tenant, but others consider that to be additional coverage which costs more. Some renter’s insurance policies will cover accidental damage caused by the policyholder. This is another reason to consider requiring your tenants to have their own policy. Even if a policy covers damage from vandalism, it may not include intentional damage caused by a tenant. This should be on your list of things to look for as you compare policies.

Water damage caused by things like a sprinkler malfunction or leaky pipes is usually covered by landlord insurance. If the water damage was caused by the tenant, the landlord may have to seek reimbursement for damages from the tenant or withhold some or all of the security deposit. This is also something that may be covered by renters insurance if the tenant has a policy. Water damage caused by a flood is not covered by landlord insurance. Flood insurance is a different policy altogether and must be purchased separately from landlord insurance.

Most DP-3 landlord policies will contain rental income loss coverage. This protects you against lost income if your leased property cannot be lived in because of damages that are covered by your policy. It is similar to business interruption insurance. Recently some landlord insurance companies started offering guaranteed income insurance. This insurance covers rental income loss if your tenant stops paying their rent. It is intended to mitigate losses while the landlord pursues legal action such as eviction of the tenant. If your tenant moves out at the end of their lease and you are left with unoccupied property, landlord insurance will not cover that. Vacant rental units that are left empty while the landlord seeks new tenants are not covered by current landlord or guaranteed income insurance policies.

Short term rental insurance was created to address the growing number of homeowners who rent their home or vacation home to short-stay tenants through platforms like VRBO and AirBnB. Homeowners insurance doesn’t cover rental use except by special endorsements that don’t provide full rental coverage. Landlord insurance doesn’t cover shared rental and residential use. Short term rental insurance policies include many provisions that landlord insurance offers, particularly regarding increased liability. Some short-term policies are used in addition to your regular homeowners insurance, and some are combination policies that will replace your homeowners insurance entirely. There are even short-term policies that will allow you to buy temporary insurance for specific rental dates.

Placing rental property within an LLC protects the owner from personal liability. In the case of a liability claim, only the LLC’s assets are at risk. The owner’s personal assets are protected. In the event of a claim, having a limited company landlord insurance policy may help the owner to keep the LLC assets as well. Also, being in an LLC does not protect the owner against financial loss from property damage or rental income loss in the event of property damage. That would require landlord insurance. Landlord insurance is recommended whether you own investment property individually or through an LLC.

There are a lot of factors to consider when choosing landlord insurance. Is your rented property a rental house, a condo, or an apartment building? Is it a full-time investment property or a short-term rental? Are you in a high-risk area? Is your property old or new? Not all insurance companies are the same. Some landlord insurance companies give better pricing for bundling multiple policies. Some insurance company’s policies are better at providing inflation protection or insuring more than 10 units. You can spend a lot of time just making a list of the best companies for you to consider. Consider working with a local insurance agent who will help you choose the best rates and coverage type for your needs. HouseCashin has prepared a directory of the best landlord insurance agencies that will fit your needs. HouseCashin has carefully selected these companies for their integrity and their experience so that you can get the best assistance when choosing your insurance provider.