Lawyers.com > Understand Your Legal Issue > Leases and Leasing > Landlord Tenant Law > Insurance for Landlords

The wise property owner has insurance to protect the property, and particularly the building or home on the land as well as the contents of the home. In fact, if there's a mortgage on the property, the bank or mortgage company probably required you to get some property insurance, primarily to protect against losses caused by fire or natural disasters.

As the owner of rental property, you have special risks on top of those of other property owners, such as:

• Possibly being sued by a tenant for wrongful eviction
• Loss of income if the rental property is unusable
• Coverage for out buildings, like detached garages or storage sheds

It's critical that you understand the various types of insurance coverage that you might need as a landlord to protect you and your investment from all kinds of potential risks and losses.

Property Insurance

Property insurance is the place to start. You'll need to make sure that the rental property is covered against natural disasters that are common or likely in your area, like floods, tornados, earthquakes, and hurricanes. You'll also need to have coverage for losses by fire.

These types of coverage are, of course, vital for the protection of the building, that is, the structural components: roof, walls, foundation, etc. But, be careful not to overlook the personal property you, as opposed to your tenants, might have in the premises: furniture, appliances, and tools. If the building is destroyed, you'll have to replace those items, so make sure they're insured.

Usually, your tenant has no obligation or duty to insure your property; he or she is only responsible for his or her belongings. But, in some states, you can include a provision in the lease that requires your tenant to carry fire insurance to protect you from losses caused by a fire that happened because of the tenant's negligence or carelessness. Or, the lease can provide that the tenant will pay an increased rent to cover your costs for paying for fire insurance.

Regardless, unless there's a special provision in the lease, the tenant can't be liable to you for failing to get or pay for fire insurance.

You might have out buildings, like garages or storage sheds, and you'll want to consider getting coverage for those structures and their contents. Typically, a homeowners' insurance policy won't cover structures that are not attached to the home, or the contents of those structures. But, many insurance companies will offer such insurance to residential landlords, so you can get coverage for things like tools and lawn mowers that you might have in a shed.

Finally, if your rental property is destroyed or damaged by fire or another catastrophe, and the property can't be rented until it's repaired or rebuilt, think about the lost rental income from the property. This is particularly important if you're using the rent payments to pay a mortgage on the property. Many insurance companies can offer you insurance to cover lost rent/income in such circumstances.

Lawsuits & Legal Fees

Unfortunately, there might be a time when you're sued as a result of something connected to the rental property. This could include things like:

• If a tenant sues you for wrongful eviction, such as if, after the tenant failed to pay rent, you changed the locks on the doors to keep him or her out of the premises, or you turned off the heat to make him or her leave, instead of going to court and getting an eviction order, as required by most states' landlord-tenant laws
• A prospective tenant claims that you committed discrimination when you refused to rent to him or her because of his or her race, color or religion, for example
• A tenant claims that you invaded his or her privacy by entering his or her apartment without permission or good cause, such as to make a necessary repair
• A tenant, a guest of the tenant, is injured on the leased premises and he or she claims it was your fault because you didn't fix some dangerous condition, like a faulty hand rail on the steps

There are insurance policies that can help you in these situations, where the insurance company will pay any damages that a court might award to the tenant/victim if he or she is successful in a suit against you. Also, many of these insurance policies will cover your costs and attorney's fees, and most will even provide that the insurance company will act as your attorney and defend you against such claims.

As a landlord, it's easy to see the benefits of having such insurance.

What About the Tenant?

Generally, you don't have to insure the tenant's property. In most states, it's up to the tenant to get and maintain insurance-called "renters' insurance"-for his or her personal property that is kept in or on the leased premises, like clothes, furniture, and electronics. In some states, however, if you have fire insurance and the tenant does not, and the tenant's personal property is damaged or destroyed, your insurance protection will be extended to cover the tenant's loss. The reason for this is, usually, that it is reasonable for a tenant to believe that the rented premises are insured against fire and that he or she is covered.

Questions for Your Attorney

• My lease requires the tenant to maintain fire insurance. I just discovered that he hasn't bought any yet. Can I evict him?
• My insurance company is defending me in a discrimination law suit filed by someone I refused to rent to. I don't think the insurance company's lawyer knows what he's doing. Can I hire you and make the insurance company pay your fee?
• My apartment building was destroyed by a tornado. The insurance company is going to pay to have it rebuilt, but the amount they're willing to pay won't cover all the costs of rebuilding it. Is there anything I can do?
• Can I require my tenants to get renter's insurance if it's not required under the current lease?

Related Resources on Lawyers.com^sm

- Getting a Tenant for Your Vacant Rental
- Find a Real Estate Law Lawyer in your area
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