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We’ve all heard horror stories about renters who leave the apartment in disarray when they move out. And while this is often the extreme, it’s also true that most landlords have to deal with some level of damage to their property over the course of renting it out. Some would say it’s just the cost of doing business!
And to help cover that cost, there’s landlord insurance. It covers medical bills and legal fees for on-site accidents (also known as liability insurance), rental income loss, and in some cases, property damage. But what happens if your tenant is at fault in any of these situations?
In this article, we’ll explore whether landlord insurance covers tenant damage, and how you should proceed in certain scenarios.
The short (and not-that-helpful) answer: Landlord insurance covers some tenant damage. To get you an answer that’s actually useful, let’s explore what types of damage it does and does not cover.
Your landlord insurance provides dwelling coverage, which means your policy will help pay to repair or replace structures on your property damaged by a covered event. Generally, covered perils include, but aren’t limited to, fire, burglary, vandalism, and natural disasters, such as tornadoes, snow storms, and windstorms.
However, when it comes to damage caused by your tenants, your coverage is limited. Typically, your landlord insurance policy is only responsible for covering accidental damage. Here are a few examples:
In situations like these, you should absolutely file a claim with your landlord insurance company.
There are two primary types of tenant damage that your landlord insurance policy won’t cover: wear and tear, and intentional damage.
Life happens, and in the course of that day-to-day living, we expect to see normal wear-and-tear damage to property. When we say “wear-and-tear,” we’re talking about scratched floors, stained carpets, and chipped paint, to name a few examples. In cases like these, insurance won’t cover any repairs (like repainting, re-sanding floors, etc).
Similarly, your landlord insurance policy won’t pay out if an appliance breaks down from repeated use. You’re responsible for maintaining and eventually replacing the unit.
Even though you can’t file a claim for wear and tear damage, that doesn’t mean you’re financially on the hook for the whole bill. You may be able to use your tenant’s security deposit to cover some or all repair costs.
However, you still need to follow your state’s laws regarding how to handle security deposits. For example, according to Florida’s Landlord/Tenant Law, landlords are required to send an itemized list of repairs that will come out of the security deposit to their former tenant within 30 days of the move-out date. The renter then has 15 days to object in writing.
Pro Tip: Include a clause in your lease agreement about how your tenant’s security deposit will get used in the event of property damage. You might also want to share some average costs to repair wear and tear damage. That way, they’re incentivized to take better care of your property and get their full security deposit back.
If your tenant becomes *ahem* disgruntled for any reason, they could, for example, punch holes in your ceiling (yikes!), take a sledgehammer to your countertops (yikes!), spray paint obscenities on your walls (rude!), or steal your lawn mower (yikes!). That damage could cost thousands of dollars out of pocket to repair. And unfortunately, your landlord insurance won’t help with the expense.
Fortunately, you’re not totally without recourse. You could withhold your tenant’s security deposit (for good reason!). You could also sue them for costs that exceed the deposit, though going to court is a costly move in and of itself.
As a landlord, it may seem like you get stuck holding the financial bag in a lot of situations involving your tenants. However, the folks living in your property are wholly responsible for damage related to their property.
More specifically, your landlord insurance doesn’t cover your tenant’s personal property (whereas your standard homeowners insurance will cover all of your property). So, if your tenants want to protect their personal belongings, they should purchase a renters insurance policy. And another benefit: renters insurance covers your tenant if one of their guests gets hurt on the property or experiences another covered loss.
Exception to the rule: If your negligence as a landlord causes damage to your tenant’s personal belongings, your landlord liability insurance may pick up the tab to replace them. For example, if you knew there was a leak in the roof but failed to repair it promptly, your landlord insurance may cover the replacement cost for your tenant’s water-logged laptop.
Pro Tip: We recommend letting your renters know that their personal belongings are not covered by your landlord insurance coverage. That way, there’s no confusion down the line about who’s responsible for damage to their personal property. You may also want to require that your tenants maintain adequate renters insurance coverage (this is fairly common practice amongst landlords).
Depending on your policy, you may be able to purchase additional coverage to protect your finances against tenant damage. For example, adding a loss-of-rent provision to your insurance can be a smart financial move. That way, if the property damage is so severe (regardless of cause) that you can’t rent out the home until it’s repaired, you may be able to file a claim for loss of rental income.
Pro Tip: It’s a good idea to chat with an insurance agent to get an updated insurance quote that reflects any additional coverage you might want to add. And if you have a sizable cash cushion, you may want to consider increasing your deductible to reduce your insurance premium — which you can also discuss with your agent.
Tenant damage can cost a tidy sum. But, in many cases, the right landlord insurance policy can help you repair your rental property without breaking the bank.
Not sure where to find the best insurance coverage for your rental properties? Try Marble’s Marketplace. You can browse, compare, and manage all types of insurance policies in one convenient place — and even earn rewards while you’re at it. Create your account today to start saving and earning!
