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Do Landlords Need Umbrella Insurance for Rental Properties?

Aug 09, 2023

Umbrella Insurance

Is there requirement of umbrella insurance for rental properties? Is there requirement of umbrella insurance for rental properties?

Landlords need comprehensive liability coverage to ensure they are financially secure against damage or loss to their rental property. Despite having adequate risk management systems in place, accidents may happen. While the liability coverage in their landlord insurance covers them in the event of claims filed by their tenants, there may be instances when they require more coverage than their existing insurance offers. This coverage gap can be covered by umbrella insurance for rental property.

This blog discusses the difference between landlord and umbrella insurance, whether umbrella insurance provides coverage for multiple properties, how umbrella insurance works, and when a landlord can use it to their benefit.

How Does Umbrella Insurance Differ from Landlord Insurance?

To better understand whether a landlord needs umbrella insurance for rental property, let us first understand the difference between landlord insurance and umbrella insurance.

Landlord Insurance

This insurance is for individuals who rent out their property. The policy consists of:

  • Property Insurance

    It covers the physical property related to the rented home, including the main structure, other structures, and personal property used to service the property.

  • Liability Insurance

    It covers medical costs, property damage, or legal expenses if someone is injured on your property for which you are held responsible.

Umbrella Insurance

This coverage provides additional liability protection to your homeowners, auto, and landlord insurance policies. It covers the liability claims of bodily injury or property damage and the litigation costs if the aggrieved party decides to sue you, regardless of who is at fault.

Does Umbrella Insurance Offer Coverage for Multiple Properties?

Typically, personal umbrella insurance may cover 3-6 properties through different insurance providers and may follow separate specifications regarding the number of rental properties umbrella insurance can cover. If you have invested in many rental properties, buying commercial umbrella insurance for rental property can be your best option.

Consult your insurance provider, as they can offer you the best solution.

How Does Umbrella Insurance for Rental Properties Work?

Your landlord insurance liability coverage has a fixed coverage limit. However, if the incident at your rented place costs you more than the coverage limit, it may lead to considerable out-of-pocket expenditure. Buying umbrella insurance provides an extra layer of security as it covers the amount not covered in your basic liability insurance. You have to pay only the deductible for your landlord insurance to ensure that the umbrella policy carrier pays out the remaining settlement amount.

Scenarios When a Landlord Can Benefit from Umbrella Insurance

Having umbrella insurance for rental property can benefit a landlord in several types of scenarios, such as:

  • Lawsuits due to damage caused by tenants
  • Injuries to guests or tenants by a damaged appliance
  • Injuries to guests or tenants in the community space
  • Injuries to individuals on your unoccupied property
  • Injury or property damage to the current tenant by an ex-tenant caused by easy access to the rented property

Get Added Protection for Your Assets with CF&P Insurance

Get specialty personal umbrella insurance coverage tailor-made to your unique needs from CFP Insurance Brokers. Our team has the expertise and experience to offer you the best coverage options. For more information, contact us today. You can also call us directly at (925) 956-7700.

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