LANDLORD AND RENTERS INSURANCE – What do these actually cover?

Landlords and Renters have assets that should be covered. However, sometimes there are misconceptions that can lead to finger pointing as to who is responsible in the event of a loss. For this reason, it is important that both landlords and renters each have their own policies. Let’s explain the difference between and why each is needed.

Landlord (LRO) Insurance

Lessor’s Risk Only (LRO) Insurance, also known as Landlord’s Insurance, is a specific type of liability coverage for individuals who lease at least 25 percent of their building. LRO is common among owners of rented homes, multi-family units, apartment buildings, warehouses, retail buildings and commercial office space, and it may be required in your area.

When it comes to landlords having tenants it is crucial that they have tenant vandalism coverage. This coverage may already be included in your LRO policy, but if it isn’t, you need to let your insurance agent know you want it added. This covers accidental and intentional damages from the tenant that exceeds the tenant’s security deposit.

LRO is a broad coverage that will cover many types of losses, including theft, vandalism, fire, burst pipes, weather-related damage, injury to tenants or customers due to unsafe building conditions and damage to property. LROs will also provide tenants and their customers with property damage and liability coverage. Many landlords will require that tenants secure their own property damage and liability coverage in addition to the owner’s coverage.

Landlord insurance claim examples

Landlord related claims could be expensive. For example a liability claim for a slip and fall or extensive property damage can well exceed the cost of a policy. Here are some examples of landlord related claims:

Ø Legal Liability

Say someone trips going down the stairs in a building and sues the landlord. A court might hold the landlord responsible for the tenant’s medical and legal costs if the stairwell lights were burned out, etc. Here, the landlord’s liability coverage steps in to pay for the landlord’s legal fees and settlements or judgements.

Ø Property damage due to fire

On average, property restoration due to moderate fire damage would cost at least $2,000 to $6,000. But larger fires in a property can cost well over $40,000. If most of the property is destroyed by the fire, the cost can amount to even more. If the coverage limit is up to $1,000,000, then the property repairs could be covered up to this limit.

Ø Acts of vandalism

Vandalism done to your property will be covered by a comprehensive landlord insurance policy, up to the coverage limit.

Dug-up landscape – restoration could cost over $1,800

Graffiti – cleanup is around $500.

Broken windows – major repairs would cost around $2,000

Renters Insurance

As a tenant/renter, having insurance is highly recommended because in most cases, your landlord’s insurance policy covers only structural damage to the building itself not your personal belongings. Renters insurance protects your personal possessions in case of a covered loss. It also extends beyond off-premise losses covering property that is stolen from your car or is lost or damaged anywhere you happen to be. Having renters insurance also covers loss of living expense in the event the tenant’s unit is uninhabitable due to a covered loss. This will cover tenant expenses exceeding normal living expenses. Some landlords make it a requirement for their tenants to purchase renters insurance. This is because such coverage can help limit the financial exposure of both the tenant and the landlord if an incident occurs. The cost for renters insurance is relatively inexpensive, usually less than $200 per year depending on the limits purchased.

Some landlords require proof of renters insurance. The best way to show proof is to add your landlord as a party of interest. Landlords do this so they are notified if the policy gets cancelled or non-renews. Your landlord being listed as a party of interest doesn’t mean they will be covered by your policy. Renters insurance provides protection against both property loss and liability in the event that you cause injury or property damage.

Renters Insurance claim examples

Ø You decide to take that vacation you’ve been saving up for, only to have your luggage stolen at the hotel after you get there. A renters insurance policy provides coverage for your belongings.

Ø You have friends over for dinner at your new apartment and someone trips in the living room and breaks an arm. Renters insurance will pay for a guest’s medical expenses.

Ø Severe weather damages your home or apartment building and you must live elsewhere while the repairs are being made. While you would not be responsible for the damage to the structure as a renter, your landlord is not responsible for damage to the personal property inside your unit. Renters insurance can help pay for additional living expenses, such as a hotel, when you are displaced.

Ø Renters with a pet – Consider a tenant without renters’ insurance whose dog bites someone. Typically, a liability policy would cover any damages (including medical bills) associated with a dog bite. But without it, they would have to pay those out of pocket. The average cost of a dog bit in U.S. is approximately $35,000