Here in Florida, many residential leases will require the tenant to obtain “renter’s insurance.” This is an insurance policy that covers damages to the leased premises that occur due to the tenant’s negligence, as well as harm incurred because of a third party (such as theft, where the policyholder can file a claim for property losses).
Tenants may assume that the owner, as their landlord, has a policy to cover the residence, as well. These may be policies that cover damages to the residential property that provide the standard property insurance coverage that mortgage lenders require (e.g, “homeowner’s policies”).
What are Landlord’s Insurance Policies?
However, for those who rent homes, townhouses, condos, or apartments here in Florida, there are additional insurance policies that can be purchased from a wide variety of insurance carriers that are specific to the needs of a landlord.
These are Landlord Insurance Policies, and they cover the situation where the policy holder does not live in the dwelling, but leases it to someone else. As a general rule, Landlord Insurance Policies are necessary because most homeowner’s policies have specific provisions that state the coverage will not apply if the property has been rented to a third party. Usually, when the dwelling is being rented out for four weeks or more and the owner is not residing on the property, the homeowner’s policy will not cover any damages that are sustained.
Landlords must carefully review their homeowner’s coverage to learn its limitations, because different carriers offer different exclusions regarding short term rentals of homes and condos. It is wise for the owner to discuss with his insurance company that the property will be a rental unit in advance, to learn when the existing homeowner’s coverage ends and where a Landlord Insurance Policy is necessary.
How Are They Different from Homeowner’s Policies?
There is no law in the State of Florida forcing a landlord or owner to purchase a Landlord’s Insurance Policy. However, if the landlord has a mortgage on the property, the lender may require this coverage.
This is because the Landlord’s Insurance Policy provides different protections than a standard homeowner’s policy.
What Can Landlord’s Insurance Cover?
The coverage can be negotiated in a manner similar to automobile insurance policies. Not every landlord will deem it necessary to buy coverage for every contingency. Owners who are more risk averse may choose to buy a comprehensive plan.
Landlord’s Insurance for residential rental property can protect many things, such as:
- The land itself;
- The improvements built upon the land, i.e., the physical structure of the property;
- The personal property placed in the dwelling (refrigerator, stove, hot water heater, etc.);
- All fixtures (carport, fence, pier, deck, patio cover, etc.); and
- All fittings (drapery, blinds, etc.).
Policies can also be written to cover lost income when the rental property must be vacant in order for repairs to be done, and for personal injury liability coverage. This liability coverage protects the landlord financially if someone is injured on the rental property and sues him for personal injury damages (like a slip and fall on the front stoop or wet sidewalk).
Landlord’s Insurance Policies can also provide protection should the landlord be sued for wrongful eviction, or for intentional tortious actions including alleged defamation of the tenant (libel, slander).
Attorney’s fees and court costs can be provided under these policies. Additionally, some carriers offer “Inflation Protection,” which protects the landlord against inflation by providing that policy limits will be adjusted to keep pace with inflation.
Finally, there may be particular provisions that apply to the location of the residential property itself. For some parts of Florida, additional coverage may be offered for things like sinkholes or risks associated with coastal properties.
NOTE: These policies do not cover losses sustained by the tenant in the form of their lost personal property. Landlord’s Insurance Policies cover only the property owned by the landlord.
Standard Residential Landlord Insurance Coverage Options
From an insurance perspective, coverage for a residential landlord usually comes in three different packages, which the owner can choose for his particular policy coverage. These are:
Option 1
These are basic Landlord Insurance Policies, which is considered the least expensive protection and accordingly, covers the least amount of issues. Fire may be covered, for instance, but not storm damage from high winds. It also provides the least amount of coverage. For instance, if the residence is destroyed by fire, then the policy will provide actual cash value cost, not the cost of replacement.
Option 2
The mid-level Landlord Insurance Policy will cost a bit more, but it will give more protection. This coverage will cover “named perils” as they are identified in the policy documents. If there is hail damage, then the residence’s carport damage will be covered if “hail” is listed among the covered perils in the policy.
Option 3
This is the most expensive, and most comprehensive, Landlord Insurance Policy. It is considered an “open peril” policy, which provides insurance protection for the residential property unless there is a specifically named exclusion. If the policy does not list the cause of the damage as being excluded, then the claim will be covered by this Landlord Insurance Policy. Additionally, this policy will provide the most coverage. Here, if the residence is destroyed in a fire, the coverage will allow for full replacement cost of the rental property.
Umbrella Coverage
For owners who have more than one rental property, then it may be advantageous to have an “umbrella policy.” This extends the Landlord’s Insurance Policy to the various rental properties.
What about HOA or Condominium Coverage?
Owners of condo units do not own the common areas of the condominium individually; this is shared ownership which will be covered by a separate Home Owners’ Association Policy. The details will be set out in the governing documents.
If there is a fire, then the HOA Policy will cover the damage to the common areas. It will not cover the owner’s individual unit. Therefore, smoke damage to the hallway may be covered by the condo’s HOA policy. Smoke damage to the interior walls of the condo units will not be covered by the HOA policy. This means that the owner who has rented out that condo unit is wise to have protection with a Landlord’s Insurance Policy that provides fire protection for the unit.
When Can the Tenant Learn about the Landlord’s Insurance Coverage?
Tenants have no legal right to review the Landlord’s Insurance Policy, or to have confirmation that the landlord has kept up with any coverage over the course of the rental term. The decision to buy a Landlord’s Insurance Policy is the private business of the residential owner/landlord.
While it is wise to purchase the coverage, the tenant cannot insist upon it. The maximum that the tenant can do to protect himself as a renter is to purchase his own Renter’s Insurance Policy.
This does not mean that the tenant will never learn of a Landlord’s Insurance Policy. If there is an accident or incident on the rental property that results in a damage claim, then the policy coverage may be disclosed. This may occur as part of informal settlement negotiations, when the insurance carrier’s adjuster enters the picture to resolve things in accordance with the policy. It may also be revealed when a lawsuit is filed, and the accident victim demands its revelation as part of the formal discovery process in litigation.
Florida Tenant’s Rights Lawyer Can Help With Landlord’s Insurance Coverage
Tenants who are considering a long term rental should be aware of the legal responsibilities of the landlord for the repair and upkeep of the residence. While there is no legal right to have information regarding the landlord’s insurance coverage, the savvy tenant is wise to inquire about it.
Knowing that the landlord considers any Landlord Insurance Policy as being unnecessary or that he thinks it is frugal to purchase only the most basic coverage may be a red flag to the tenant about the condition of the property now, and how well the property will be maintained over the course of any leasehold.
It is acceptable and smart for a tenant to negotiate the contract provisions of a lease before you execute the contract and officially rent the property. Having an experienced Florida real estate attorney review the lease agreement and negotiate the final lease on your behalf can be much less expensive than many realize.
What if you signed the lease and now there has been damage to the home or condo?
As a tenant, your lease agreement will define the rights and duties you have undertaken as well as those responsibilities that lie with the landlord/owner. Regardless of whether or not he has been prudent enough to pay for a Landlord’s Insurance Policy, if the tenant has a legal claim against the landlord/owner, the law provides that tenant with legal recourse against the landlord. The lack of coverage does not shield the landlord/owner from liability.
Please feel free to give us a call for a free consultation if you have a question or concern.
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