The average salary for a real estate investor is almost $124,000 a year. Of course, not many people start out making this much.
Many factors can determine your salary. Your location, the prices of properties in your area, and the quality of tenants are all things you need to consider.
If you don’t take the time to screen tenants, you could end up with renters that destroy your property. While you can use their security deposit to cover some of the destruction, it may not pay for it all.
The question is, does landlord insurance cover tenant damage? The answer is that it depends. Continue reading to learn more.
What’s Covered by Your Insurance Policy?
Landlord insurance covers accidental damage. If your tenant starts a kitchen fire while cooking eggs, your policy will handle it.
You’ll receive compensation for any furnishings destroyed in the fire owned by you. While the repairs are underway, you can’t collect rent, but you don’t have to worry about your finances. Your coverage will keep you afloat. That makes the landlord insurance cost more than worth it.
What Isn’t Covered?
Landlord insurance coverage doesn’t typically handle damages caused by bad weather or pipe bursts. That’s why many landlords require their tenants to have renters insurance.
Insurance policies don’t cover intentional damage. If one of your tenants punches a hole in your wall or breaks your light fixtures, you’ll have to take it out of their security deposit. If their security deposit doesn’t cover all the damages, it’s possible to sue them for the rest.
As a tenant occupies your property, it will suffer normal wear and tear. Furniture breaks after long periods of use. Drinks get spilled on white carpets.
The good news is that nine times out of ten, the tenant’s security deposit will be more than enough to handle these little repairs.
You are responsible for maintenance issues. If your tenant’s hot water heater goes out or they bring in a bed bug infestation, it will be up to you to fix it.
What About the Tenant’s Property?
Landlord insurance doesn’t cover the cost of a tenant’s damaged property except in one instance.
If your tenant sues you for property damages, your insurance coverage will cover the liability costs and legal fees. It will also handle the settlement if you’re found at fault.
Other than that, your tenants are responsible for their own belongings. That’s why you should encourage them to opt for renters insurance.
Does Landlord Insurance Cover Tenant Damage? It’s Complicated
Does landlord insurance cover tenant damage? The short answer is yes. It can handle certain damages.
If your tenant sets fire to the kitchen by accident or punches a hole in the wall while moving furniture, you won’t have anything to worry about.
If the damage was intentional, however, that’s where your insurance coverage won’t help. It also doesn’t cover a tenant’s property. That’s what a renter’s policy is for.
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