Homeowner’s Insurance for Landlords: What You Should Know

Are you a landlord looking for the right homeowner’s insurance policy to protect your property investment? Insurance may seem like an additional expense on top of bond payments and maintenance costs, but having adequate rental property insurance can save you thousands of rands in the long run. As a landlord, you are responsible for protecting your investment property from unforeseen events that could cause damage or liability issues. That’s where First for Women homeowner’s insurance comes in.

Do I need homeowner’s insurance for a rental property? Find out more. In this blog, we’ll cover everything you need to know about this type of coverage, from liability protection to rental income loss, so that you can make informed decisions about how best to safeguard your rental property as a landlord.

 What does homeowner’s insurance cover for landlords?

Being a responsible landlord requires a commitment to maintaining high standards of safety and comfort for your tenants and a willingness to be proactive in addressing any issues. This includes ensuring that the property is in good condition and that your tenants are safe.

Some homeowner’s insurance policies do not protect you against damages if the property is empty or occupied by a tenant. You need to check the terms of your specific policy. Insurance for landlords, however, will cover the cost of repairs if your property is damaged by fire, vandalism, weather, natural disasters or the tenant. It may also cover public liability if someone is injured on your property. In essence, insurance for landlords will protect you financially if something goes wrong.

Read through your policy terms carefully so you know what is and isn’t covered. You can usually purchase additional coverage if there is something specific you want to insure against. For example, will the policy cover the loss of income when the property has been damaged and can’t be occupied? If you want to know what rental property insurance makes the most sense for your rental property, you can talk to one of our expert brokers at 1st for Women.

 Do you need insurance for a rental property?

Understanding the differences between homeowners’ and landlord’s insurance can be confusing. The simple explanation is that home insurance protects the property owner’s personal residence and belongings, and landlord’s insurance specifically covers rental properties.

Although homeowner's insurance is not legally required, protecting your property from various risks and unexpected events is highly recommended. This type of insurance covers losses which can be financially devastating if you are not covered. Evaluating your specific needs and understanding the differences between these types of insurance can assist you in determining which coverage is best for you.

 Check if you need landlord’s insurance

If you simply rent out your home on a limited basis, you may not require rental property insurance.  For example, suppose you take a few weekend excursions each year and rent your property during those periods. In this situation, your homeowner’s insurance coverage may protect you if your home is damaged while you are away.

Long-term rental insurance, often known as rental property insurance, is for when you rent out your property for an extended length of time, such as several months or even years.

However, every policy is different. So, to secure proper coverage, check with 1st for Women’s team of expert advisors to find out which type of insurance is best suited to the length and type of rental you are planning.

 Check the duration of the homeowner’s insurance

Policies are only intended to cover the property where the owner lives; they do not cover holiday homes or long-term rentals. This sort of insurance is not appropriate for vacant properties for most of the year. Certain coverages are required in such instances to provide adequate protection for the property. For example, empty residences require a separate insurance policy, whereas landlord coverage is required for properties rented long-term to tenants. For this reason, looking into specialist insurance options that provide appropriate coverage for your specific needs is essential.

 Personal property inclusions

Homeowner’s insurance protects against loss or damage to the physical structure of your home, but not necessarily the household goods inside it. Moving items such as furniture, curtains, home appliances, and clothing must be covered under home contents insurance. This insurance is designed to cover personal property against loss or damage caused by accidents such as theft, burglary, fire, malicious damage, and/or natural disasters like storm and flood damage. The homeowner’s insurance does not cover the tenant’s personal property, so it’s good to warn your tenant that they need to get this coverage for themselves.

Personal property insurance policies provide homeowners with coverage up to a certain amount. So, remember to review your policy regularly to ensure that you have adequate coverage for your personal belongings and to update the policy whenever you acquire new personal effects. 

 Homeowner’s insurance and public liability

Liability coverage is typically included[1] in all standard home insurance policies. Homeowner’s insurance usually covers the policyholder and their relatives who live on the insured property; it sometimes extends to friends who are visiting. Liability coverage is intended to protect the homeowner if someone is injured on their property and they are found legally responsible. If you, as the homeowner, are sued, this coverage can help pay for medical expenses or legal fees. However, it is important to note that liability coverage limits may differ depending on the policy and the insurance company. Reviewing your policy carefully and regularly and considering additional coverage if necessary to ensure adequate protection during an unexpected disaster is critical.

Landlord's insurance typically only includes liability coverage for the rented premises and if a tenant is injured on the property and the landlord is legally responsible. Several laws, most notably the Rental Housing Act and its amendments[2], regulate the rental market. You should be aware of these laws as a landlord. The Rental Housing Tribunal[3] will settle disputes under the terms of this Act, which regulates the relationship between landlords and tenants. It was implemented to safeguard the rights of both the landlord and the tenant.

 Cover for property structure and detached buildings

In South Africa, homeowner's insurance typically includes cover for the property structure and any detached buildings on the property. This type of coverage protects the property's physical structure, including the walls, roof and foundation, against damage caused by inclement weather, like fire, lightning, winds, hail and other natural disasters. For example, you will be covered if there’s a hail storm and your windows are broken.

Detached buildings such as garages, sheds or workshops are also covered under this policy, although the level of coverage may vary depending on the policy and the insurance provider. Some homeowner's insurance policies may provide a set amount of coverage for detached buildings, while others may offer additional cover options for these structures.

It's important to review your policy carefully to understand fully the scope of protection offered for the main house and any detached structures. Considering the value of the property and any detached buildings on the property, it's also essential to ensure the level of coverage is adequate for your unique needs.

 Having the right insurance for detached buildings and property structure is necessary for safeguarding your investment in your house and property. Having the appropriate insurance coverage can assist you in recovering financially and getting back on track in the event of unforeseen events, such as extreme weather or other natural disasters. It’s important to remember that homeowner’s insurance does not cover moveable items in your home or detached buildings.

 The difference between loss-of-use and loss-of-rent

Under South African law, loss-of-use and loss-of-rent are two distinct legal concepts that relate to damages that a property owner may claim.

Loss-of-rent coverage protects landlords financially if a covered loss, such as a fire, flood or another natural disaster, renders their rental property uninhabitable. The purpose of coverage in these situations is to replace the lost rent that the landlord would have received from the tenant when the property is unusable. Loss-of-use insurance will cover the costs of the tenant relocating while the damaged or destroyed property is repaired or rebuilt.

 Get a home insurance quote from 1st For Women

In summary, homeowner's and landlord insurance protects property owners against unforeseen losses or damages. It covers a variety of potential risks, such as property damage, liability, and loss of rent or use. Contact 1st For Women for a personalised insurance home insurance quote to ensure you have the right coverage for your needs. Don't put your investment at risk by being underinsured; protect it today.

Sources:

[1] Experian: What does homeowner’s liability insurance cover? 

[2] Private Property: Rental housing amendment act update 

[3] Legal Wise: The Rental Housing Tribunal 

Disclaimer: The information in this article is provided for informational purposes only and should not be construed as financial, legal, or medical advice.