For people renting out their houses, a landlord insurance coverage is as important as getting the verification done for tenants. The insurance helps landlords meet the financial losses related to rental properties. This assurance gives them peace of mind, as there can be numerous troubles related to the property.
What is Landlord Insurance?
A landlord Insurance is a comprehensive coverage that offers financial protection to landlords renting out their property. It is designed keeping in mind the interests of the landlords so that their property and contents of the property are insured against untoward incidents.
Types of Landlord Insurance Plans
There are basically two types of landlord insurance offered in India. They are:
It is for people who own a residential property and are either living in it or have rented it out.
Commercial: It applies to those who have a property and have rented it out for commercial purposes or are carrying out their own business operations in the same.
What all Landlord Insurance Covers?
A landlord insurance provides 2 types of coverage to the policyholder. They are:
Property Coverage: This section hold good in case of a damage to the structure of the property and/or contents of the property. It covers losses due to incidents like earthquakes, storm, rain, theft, burglary, etc.
Liability Coverage: If a tenant or anyone on your property gets injured or suffers losses due to negligence on your part, compensation will be paid by the insurance company under liability coverage.
Loss of Income Coverage: Under this section, if the property becomes uninhabitable due to reasons mentioned in the policy document and hence your income is cut off from this source, the insurance company pays for this loss of income.
A landlord insurance can be taken by:
- Residential landlords: Who may live in the property or rent out the same
- Commercial landlords: Who may be having business operations in the property or leased/rented it out for commercial purpose
Claim Process for Landlord Insurance
Every insurance company has a defined claim process mentioned in the policy document and it varies from company to company. However, some general guidelines to be followed for filing claims under landlord insurance policy are listed below:
- Call at the helpline number provided by the insurer to inform about the event
- After the authentication of the caller (i.e. you), the claim will be registered with the Claims Department of the company
- A surveyor appointed by the company investigates about the authenticity of the claim
- On submission of relevant documents and their scrutiny, the surveyor submits the final survey report to the insurance company
- If approved, the claim gets settled as per the terms and conditions under the policy and the compensation is given to the landlord
Documents Required for Claim Process
While filing for the claim, make sure the following documents are submitted:
- Claim form
- ID proof of the policyholder (Aadhaar Card, PAN Card, Driving License, etc.)
- Address proof (Aadhaar Card, Ration card, utility bills, etc.)
- Detailed description of the damage
- Policy document
- Repaid estimate
- Any other document asked by the company
- FIR, fire brigade reports
- Medical officer’s report, etc. (if any)
Note: This is not an exhaustive list.
Exclusions under Landlord Insurance
The cases not fit for a claim are called exclusions. Some of them under a landlord insurance policy are:
- Damage to the property caused by war, invasion, civil war, or nuclear risks
- Loss or damage to the property due to regular usage or spoilage
- Loss or damage caused to any electronic equipment due to over-running or excessive pressure
Note: This is not an exhaustive list. Some more points might get added depending on the provider
Some of the key features of the landlord insurance policy offered by various insurance companies include:
- Landlord can secure the advance rental deposits given by the tenant when a binding legal agreement is signed between the landlord and the tenant
- Get a true valuation for the contents of the building, along with the valuation of the building before signing up for the policy
- In case of complete damage to the property due to the risks covered under the policy, the cost of the land is not included in the claim settlement amount
- The sum insured in the policy for the building structure is calculated based on several factors like area of the land on which the structure is built, geographical location, security installations on the premise, etc.
- It is advised to go for a landlord insurance for a longer duration like 5 years to avoid repetitive renewals
Advantages of Landlord Insurance
Some of the benefits of the landlord insurance policy are below:
- If the property is completely damaged due to reasons covered under the policy, the landlord is compensated with full replacement cost
- In case of any bodily injury to a third person for which the landlord is responsible, the liability add-on under the policy helps the landlord with the costs incurred due to claims, lawsuits and other expenses
- Advance rental deposits made by the tenant can also be secured by the landlord under this policy
Q1. If the landlord has a rental property in an apartment already insured by society, will it be wise to take an additional landlord insurance policy by the landlord?
Yes, it would be beneficial. The landlord insurance policy not only covers the structure but also the contents of the rental property and various other risks which may cause monetary loss to the landlord.
Q2. What is reinstatement cost?
A reinstatement cost is the total cost borne by the insurance company to restore the damaged property in its original condition, if the property is fully damaged due to the risks covered under the policy. However, the cost of the land is not included in the reinstatement cost.
Q3. How can a landlord cover himself from any risk which may arise due to the legal suit filed by the tenant?
The landlord can opt for liability add-on cover along with the Landlord Insurance Policy that protects him from any liability cost arising out of legal suits or compensation filed by the tenant in such a scenario.
Q4. If the property is partially damaged by a heavy storm and requires few months for complete repair before it is again rented out, will this policy cover the losses in the rental income?
Yes, some insurance companies provide an additional coverage to secure the loss of rental income due to non-occupancy arising out of insurance risks covered in the policy until the property is restored for renting again.
Q5. How is the premium calculated for landlord insurance?
Costing or the premium calculation for landlord insurance is based on size of the property, geographical location, installation of security equipment, etc.