Types Of Insurance for Landlords
(Quotes, Cost & Coverage)

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What are the types of insurance for landlords and property investors? Every property is different and there are many different types of commercial property and liability insurance available for landlords of both commercial and residential properties.

Types Of Insurance for Landlords

Types Of Insurance for Landlords

Insurance is a subject that many property investors and landlords will overlook. After all, it's not their home that they're buying, so why do they need to insure it? It's a big expense too, and when you're in the game to turn a quick profit, you might wonder if it is really worth it.

But while this might be a tempting approach, it is actually absolutely vital that all property owners consider insurance: even if they're only going to be flipping the home, or leasing it out to others.

After all, if you invest a large amount of money into real estate with the plan of selling it and making a profit, then a fire or a earthquake could completely destroy your business overnight and you could find yourself financially devastated. Likewise, if you have tenants, then you need to insure yourself against the unique types of damage that they might cause - this has led to many a landlord becoming unstuck.

But with proper types of insurance for landlords, you can ensure that you never fall victim to these surprises. It's simply the right business move. The only remaining question then, is what type of property & liability insurance you should purchase. Following are a few coverages to consider.

Landlord Insurance Types

Hazard And Fire Insurance

This is insurance that will protect the physical property itself against fires and other hazards. The precise things that this insurance policy will cover will be outlined in the policy and this can vary a lot from one insurer to the next (so make sure you read the small print!). But what's true in every case is that you should always be protected at least from fire.

Liability Insurance

These types of insurance for landlords that protects you against lawsuits. There are actually a wide number of reasons that you might find yourself on the receiving end of a lawsuit as a landlord - whether your tenants injure themselves on your premises, or they feel as though you haven't fulfilled your side of the contract.

Either way, if their charges are successful, you could find yourself being forced to pay a large amount of money. And even if they're not, you could find yourself needing to pay for a large amount of legal fees. This is where liability insurance comes in - and it's why it's an absolute must for landlords.

Commercial Flood Insurance

Flood insurance will only be necessary for properties that are located on a flood plain. These are regions that are particularly prone to flooding and you can find out from your local council if your property is in a designated flood zone.

Always be sure to check this out: if you're on a flood plain, then this might mean that hazard insurance doesn't cover you for the flooding - and it simultaneously increases your chances of needing that kind of insurance. Likewise, if your property is in a hurricane and this leads to flooding, then you may find that your regular hazard and insurance policy does not cover the loss. Again, research whether this is something you might need.

Terrorism Insurance

It is truly a sign of the times that terrorism insurance is a real thing. However, it's also a very sensible type of insurance to take out if you live in an area that could be a major target.

Builder's Risk Insurance

This type of insurance for landlords will only be necessary for those property owners investing in largely empty premises. If you are buying an empty building or plot of land, or if you're just overseeing major renovations, then you may want to get builder's risk insurance in order to protect yourself against a host of issues:

Loss of Income Insurance

Loss of income insurance does precisely what it sounds like: it protects you against loss of income. For instance, if you have a tenant staying in your property and that property should be flooded, then you will need to pay for the damage caused by the flood - hopefully your flood or hazard insurance will cover this.

But at the same time, you will also find that you need to evict the tenant during this time and can't find a new lodger until the repairs are made. During this time, you won't be earning the income that you should be and thus you will be taking on even more financial burden. This is precisely what loss of income insurance is there to prevent.

General Contractors Insurance

This type of insurance for landlords that should be taken out by general contractors. If you are overseeing the work yourself, then you will need this type of insurance in order to pull your own permits for renovation jobs etc.

Workers' Compensation Insurance

Workers comp is needed when you have employees (in most states). Workers compensation protects people who are injured or disabled while working. The coverages provides the injured workers with payments until they are able to work or not.

Commercial Umbrella

An umbrella insurance policy is a type of insurance that provides excess liability protection - above the underlying liability polices.

Major Types Of Real Estate And Rental Property Businesses

Insurance Classification Of Landlords

Insurers classify landlords using several coding systems. You can wind up paying more for your insurance if your real estate business is not properly classified - and there are several classifications of commercial landlords. Below are the three most commonly used coding systems for commercial property owners:

SIC Code 6512 - Operators of Nonresidential Buildings

Here is the official OSHA SIC code description for Operators of Nonresidential Buildings:

Establishments primarily engaged in the operation of nonresidential buildings.

  • Bank buildings, operation of
  • Insurance buildings, operation of
  • Lessors of piers, docks, and associated buildings and facilities
  • Operators of commercial and industrial buildings
  • Operators of nonresidential buildings
  • Retail establishments, property operation only
  • Shopping centers, property operation only
  • Theater buildings (ownership and operation)

SIC Code 6513 - Apartment Building Operators

Here is the official OSHA SIC code description for Apartment Building Operators:

Establishments primarily engaged in the operation of apartment buildings. Apartment buildings are defined as containing five or more housing units.

  • Operators of apartment buildings (five or more housing units)
  • Operators of apartment hotels
  • Operators of residential hotels
  • Operators of retirement hotels

SIC Code 6514 - Dwelling Operators (excluding apartments)

Here is the official OSHA SIC code description for Dwelling Operators (excluding apartments):

Establishments primarily engaged in the operation of dwellings other than apartment buildings. Dwellings other than apartment buildings are defined as containing four or fewer housing units.

  • Operators of dwellings (four or fewer housing units)
  • Operators of residential buildings (four or fewer housing units)

SIC Code 6515 - Operators of Residential Mobile Home Sites

Here is the official OSHA SIC code description for Operators of Residential Mobile Home Sites:

Establishments primarily engaged in the operation of residential mobile home sites.

  • Operators of mobile home sites

Further Reading On Business Property Insurance

Types Of Insurance for Landlords - The Bottom Line

We hope this article on types of insurance for landlords was informative. This might seem like a long list of different types of insurance - but it's actually not everything! There are many more options for landlords and property developers. Of course you won't need every type of commercial insurance, and it's up to you to do your research, ask around, and make sure you are covered for every eventuality.

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