Do You Need Umbrella Insurance for Rental Property?

Landlord’s insurance offers some level of liability coverage. This coverage pays for liability costs that may come about in case of third-party bodily injury or property damage. For instance, if a potential tenant comes to inspect your rental property and falls off your slippery stairs, breaking their arm, they will likely sue you for compensation. The liability portion of your landlord insurance policy will pay for the treatment and compensation costs. If the liability exceeds the limits on your policy, you will have to pay the rest of the money out of pocket. To avoid this, you should purchase the right umbrella insurance for rental property. Here is more information on this topic.

What Does Umbrella Insurance for Rental Property Cover?

Umbrella insurance is a type of liability insurance policy. The unique thing about this policy is that it only provides excess coverage on top of the primary liability coverages. Before purchasing umbrella insurance, you must have the primary policy, save for a few exceptional cases. If, for example, you want to buy umbrella insurance for rental property, the insurance company will require you to have landlord or renter’s insurance, depending on whether you’re a tenant or property owner. In case of a third-party injury or property damage, liability coverage on the landlord’s or renter’s insurance will come in. If you exhaust this coverage, umbrella insurance will come in when necessary.

Is it Necessary to Have Umbrella Insurance for Rental Property?

There needs to be a straight answer to this question. Whether you need umbrella insurance largely depends on the size of your exposure to liability risks. For example, while a landlord with an aggressive dog may need umbrella insurance, one without high-risk possessions may not need it. Note that the lack of a clear risk doesn’t translate to safety. You may not have an aggressive dog, but a former tenant can break into a current tenant’s house and cause massive damage. In such a case, the liability cost will still be on you. So, evaluate your property well to determine whether you need umbrella insurance.

Umbrella Insurance Exclusions

Like any other insurance coverage, umbrella insurance has exclusions. If you have this policy, discussing the exclusions with your insurance provider is prudent. This way, you can make important insurance decisions that save you from underinsurance. An umbrella insurance policy will not provide coverage for the following situations:

  • Damage to the policyholder’s property
  • Damage emanating from the landlord’s intentional acts
  • Bodily injuries that the landlord or policyholder may sustain
  • Losses on a rental property that belongs to a limited liability company

How Much Umbrella Insurance Coverage is Enough?

Again, the answer to this question depends on how much liability risk you’re facing. Insurance companies usually offer umbrella insurance policies in $1 million increments. Find your liability exposure to determine the best coverage size for your rental property.

Jack Stone Insurance Agency Can Help You!

Umbrella insurance is invaluable to landlords. Contact us at Jack Stone Insurance Agency today to find an all-rounder umbrella policy tailored to your specific requirements or if you have more questions about an umbrella policy.

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