Is Landlord Insurance Worth It? These 5 Benefits Might Encourage You To Get One

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Damage to property does not see ownership. Landlords, after letting out their property, rest in peace thinking any rental damage is rare and even if it happens the headache is the renters’ and not theirs. However, property damage can have far-reaching consequences for landlords, not just because they’re liable to be sued, but also because repairs to said property need to be done and they cost money.

Just like household insurance for properties that you own and live in, landlords can avail of landlord insurance to protect their properties that they have let out. However, several landlords often do not feel the necessity behind insuring their properties, since they do not live in these properties, and since renters often get household insurance for themselves anyway. However, they are probably not aware of the numerous benefits of insuring their property, a few of which we explore further.

1)    The premise of protection

It is commonly seen that landlords make the mistake of assuming that since they have let out unfurnished apartments, there is nothing of value to be protected from theft or destruction. However, their very house structure is always prone to damage from fires, earthquakes, floods, or theft of structural components itself. You should get landlord insurance not only to ensure that your tenants can live in security, but also to secure future renters staying at your place without an additional cost of property restoration.

2)    Protection from renter mistakes

Defaulting on rent is unfortunate, but more often than not, it happens. Pre-tenant screening, no matter how vigorous, always falls short, and with the rising cost of living, a spendthrift generation and rent prices going up, arrears seem inevitable. The good thing is that landlord insurance protects you from arrears. This is especially important if the rent covers the cost of upkeep and maintenance of your to-let property.

The second form of protection landlord insurance offers is protection from accidental damage. Damage ends up happening, especially if you let out a furnished property, owing to tenant carelessness or just because furniture often ages and breaks. Often, said damage can be rather costly to repair and may cause you future tenants. Thus, it is only wise to protect yourself from such unfortunate circumstances.

3)    Liability protection

Remember that landlords become liable for renter protection once they let renters use their property. Every hazard that befalls the renter on the rented property can be pinned on the landlord and he can be and is usually sued. This is especially true for aggrieved tenants who have been confronted for rent arrears and such. Thus, for an electrical fire that happens, it is the landlord that is responsible for not having the lines checked for damage, and he will be sued and charged with monetary compensation. Landlord insurance protects you not just by covering legal expenses and also paying compensation to the tenant if you have to, as personal injury coverage.

4)    Taxation benefits

Understand that letting out a property as a landlord counts as a business, which means you’re open to be administered by the same set of rules that govern businesses in general. This can be used to your advantage in the form of tax breaks in a few ways:

  • Direct tax deductions – Landlord insurance premiums can be deducted from your annual taxes as business expenses.
  • Damage coverage – In case some damage befalls your property that isn’t adequately covered by your insurance, you can apply for a tax deduction by counting it as a casualty loss.
  • Depreciation – In case the cost of your rental property reduces due to market influences you can apply for a tax rebate stating this as a reason.
  • Repair costs – All the money you spend behind upkeep of your property can be used to reduce paying taxes.
  • Mortgage interest – The interest charged over and above a loan taken to purchase the property that you rent out can also be deducted from your tax.

5)    Malicious damage by renters

Often altercations with tenants or serving them eviction notice brings out their wrath on the rental property. Not only can they damage furnishings or other things placed within the property, but also cause damage to plastered walls, take off paints, break windows and glasses or even cause burn damage if they so wish to. Landlords always need protection against such destructive acts by renters since they tend to get extremely costly to repair. Renters can even steal items and these need to be replaced for your next tenants, which can also get costly.

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Managing editor and blogger at Potentash. Passionate about telling African stories. Find me at [email protected]