Understanding Landlord Insurance Costs in California

Home / Blog / Landlords / Understanding Landlord Insurance Costs in California

Landlord Insurance Cost
By Trevor Henson in on January 29, 2021
Table Of Contents

64% of properties in the US are under-insured by an average of 27%. Owners should consider buying Landlord insurance as it can help avoid costs incurred due to vandalism, natural disasters, and potential liability lawsuits.  A typical homeowner’s insurance will not cover such damages. 

Landlord insurance: The different categories

In the US, the cost of landlord rent insurance is 20% to 30% higher than the average homeowner’s insurance. Typically, landlord insurance would cost 20% to 30% more than other conventional property insurances. But, this largely depends on the extent of coverage that the owner is looking for. The linear equation being, increased coverage is directly proportional to increased costs. Before you upgrade your policy or purchase a new plan, look at a few additional coverages to help you make a better decision.

1. Property Damage Coverage

This type of landlord insurance protects you from any damage to the building structure. It’s amongst the most economical policies to cover expenses incurred on account of natural incidents including fire, earthquake, windstorm, and hailstorm. The cost will depend on what items at the building you are insuring. It can extend to furniture, pipes, electrical appliances, and so on.

2. Liability Coverage

Under the premises liability law in California, it’s mandatory for a property owner to make the apartment building free from hazards. If your tenant slips or has any injury, you can be sued. The landlord liability insurance will protect you from the medical and lawyer costs incurred.

3. Loss of Rent Coverage

With this policy, the insurer can reimburse the rent if a tenant under lease has to vacate due to damage caused by any disaster. However, it will not apply if the tenant moves out or is evicted.

4. Additional policies

Apart from the common categories, consider paying for emergency coverage, guaranteed income insurance, and flood insurance. Let’s say your tenant notifies you about a water leak on the premises. The emergency coverage will include the cost of your travel to the apartment. On the other hand, the guaranteed income insurance ensures you’re compensated if the tenant is not able to pay you the full rent. 

How to find cost-effective landlord insurance policies

1. Comparing quotes and coverage with independent insurance agents

A number of insurance companies offer different types of landlord insurance policies. These are based on the number of properties you own, the value of the unit(s), and their location. Once you have gathered all the information and quotes from different insurance carriers, compare them against what they’re going to offer.

Remember, cheaper landlord insurance will not cover every cost incurred due to disaster and provides very minimal coverage for the loss of rental income. 

2. Quality of customer service offered by an insurance carrier

Choose a prominent company that can respond to demanding situations at your property 24/7. Such carriers should have a large team that can allocate cost and resources for repairs proficiently. If the company is not able to provide immediate solutions in case of disasters, you will end up paying from your pocket.

How Beach Front Property Management can help

In order to choose the best landlord insurance policy, you must consider the factors discussed above. Alternatively, you can consult us for all your property management needs in Southern California. 

Trevor Henson is the founder of several property management companies and is the current Chief Marketing and Innovation Officer at Beach Front Property Management in Long Beach, CA. He is a CMO, entrepreneur, Trojan, EO LA member, investment property addict, change agent, and bourbon aficionado.

Frequently Asked Questions(FAQs)

No, landlord insurance is not required by law. But it may be required by your home insurance company. Also, many buy-to-let mortgages come with the condition that you should have it.

A landlord's insurance policy usually covers physical damage to the property caused by fire, inclement weather such as thunderstorms, hailstorms, cyclones, windstorms, and tornadoes, or criminal activity such as burglary. It also covers additional buildings on the property such as sheds and garages. It also covers equipment such as lawn mowers and snow blowers that are stored on the premises for maintenance. Apart from this, expenses of injuries and accidents caused on property are covered under the landlord’s insurance policy. The policy also offers reimbursement for loss of rent.

While accidental damage caused by tenants is covered under the landlord insurance, intentional damage caused by them is not covered.

Building insurance protects the structure of a building, including permanent fixtures within the building. This typically includes roofs, bathroom fixtures, fully equipped kitchens, etc. On the other hand, landlord insurance is a special type of home insurance that protects a landlord against financial losses that may arise as a result of renting out their property. This policy covers standard fire and related hazards, as well as theft and loss of rent.

news & updates