Solved! Does Landlord Insurance Cover Tenant Damage?

Q: I’ve just purchased an apartment as a rental property and have been hearing horror stories from other landlords about tenant damage. If one of my renters damages the apartment, will they have to pay for repairs? Or does landlord insurance cover tenant damage?

A: Because homeowners insurance doesn’t cover rental properties in most cases, landlords need landlord insurance to protect their rental units. Even after brushing up on the basics of what’s covered by landlord insurance, property owners may still have some questions about their policy—in particular, whether landlord insurance covers damage by tenants?

The best landlord insurance will often cover tenant damage that is sudden and accidental, such as a grease fire that damages the kitchen. Most policies, however, won’t cover intentional damage or regular wear and tear on a rental unit or any landlord-owned contents such as appliances and furnishings.

Landlord insurance may cover unintentional tenant damage up to the policy’s coverage limits.

A landlord insurance policy will often cover accidental damage caused by tenants. Even the best of tenants can have accidents that damage their rental—for example, an accidental fire caused by a tenant while cooking dinner or a broken window from playing catch in the yard. These unexpected—and unintentional—damages may be covered by the landlord’s insurance.

Landlord insurance policies have coverage limits, so landlords will want to go over their policy terms with their insurance agent to ensure they’re adequately protected. Additionally, landlords can reduce the likelihood of a denied claim by carefully reading their landlord insurance policies ahead of time to understand any exclusions or policy limits.

Dwelling coverage on a landlord insurance policy protects the structure of the rental property from perils such as fires, storms, and certain types of water damage.

In some ways, a landlord insurance policy is similar to a homeowners insurance policy. Specifically, the dwelling coverage portion of the policy helps protect the physical structure of a rental property from covered losses. In a comparison of landlord insurance vs. homeowners insurance, both policies typically include coverage for fire and storm damage. Policies may also include coverage for water damage resulting from burst pipes, a water heater that fails and leaks, and damaged roofs, among other issues. That coverage often has specific limitations, though—flooding water, for instance, is often excluded by both landlord and homeowners insurance. Landlords can look to their dwelling coverage to pay for repairs following a covered loss or, in extreme cases, cover the cost to completely rebuild the structure of their rental property, less the deductible.

Dwelling coverage can extend to unintentional or accidental damage caused by the tenant—a fire in the kitchen, for example.

Tenant damage is often covered under landlord insurance coverage so long as the damage is unintentional and accidental. For example, if a tenant hosts a dinner party with fried appetizers, hot grease could splatter while they’re cooking and ignite in the kitchen. The fire could then spread, damaging cabinets and the walls of the kitchen before the tenant can put it out. Since the fire was started accidentally, the landlord’s insurance policy would likely cover some of the repair costs. In addition, if the tenant has their own renters insurance policy, then their liability coverage would cover accidental damage as well.

It’s recommended that landlords fully understand their coverage limits to avoid paying out of pocket after a covered loss. Even if tenant damage is covered by landlord insurance, the insurance provider will only approve a claim up to the policy limits, less the deductible. Any repair costs exceeding the policy limit will likely need to come out of the landlord’s pocket.

Landlord insurance policies typically include some personal property coverage as well, so any furnishings owned by the landlord would also be protected.

Landlords can typically insure their personal property at an apartment building or rental unit—furniture, appliances, tools, etc.—through their landlord insurance. Personal property coverage helps pay to repair or replace the landlord’s property if it’s stolen or damaged by a covered peril. Landlord insurance for personal property may also cover tenant damage under certain circumstances—if an accidental kitchen fire destroys the oven, for example, landlord insurance will likely cover the cost of replacing the appliance. Landlords should be mindful of their deductible when considering filing a claim, since the cost to repair any damage or replace covered items would need to exceed the deductible amount by a fair amount.

It’s important to note that landlord insurance doesn’t cover a tenant’s personal property. While some renters may believe that a landlord is responsible for damage to personal property after a fire, break-in, or storm, that’s typically not the case. Tenants will need to purchase their own insurance if they want to protect their personal belongings from these types of occurrences, as renters insurance covers damage to the policyholder’s own property and the liability portion of a renters insurance policy can also help pay for unintentional damage caused by a tenant.

A landlord insurance policy will not cover intentional damage, though, such as if a tenant punches holes in the wall.

As noted, landlord insurance will only pay to repair tenant-damaged property after certain types of incidents covered by the policy. If a tenant intentionally causes damage to rented premises, however, landlord insurance won’t cover the cost of repairs. Intentional damage might include a hole punched in the wall by an angery tenant or graffiti sprayed all over the interior of the unit. However, intentional damage isn’t always so extreme. For example, if a tenant gets locked out of their apartment and decides to break a window to get inside, the landlord’s insurance likely won’t pay to replace the broken window. In addition, a tenant’s liability insurance would typically not cover intentional damage to the rental property either. If a tenant were to tear up the carpet without the landlord’s approval, a landlord may wonder “Does renters insurance cover carpet damage?” Because this is considered a deliberate act, and not sudden or accidental damage, the answer is likely no.

Although landlord insurance—or a tenant’s renters insurance policy, for that matter—likely won’t help the property owner recoup the cost of repairs in these instances, it’s possible the tenant could be held liable for these damages. For instance, the tenant’s security deposit could be withheld at the end of their lease to help pay for any damage they’ve caused to the property.

In rare cases, insurance companies may consider some intentional tenant damage as covered acts of vandalism—but it’s best to check policy terms.

While acts of vandalism are generally covered by landlord insurance, similar damage caused by tenants is often excluded. As noted, landlord insurance will not likely pay to replace a window broken by a tenant who gets locked out of their home and is trying to get back inside. However, some insurance companies may treat certain cases of tenant damage as vandalism. As such, they could pay out insurance claims on intentional damage caused by a renter.

Although these cases are very rare, landlords are encouraged to check their policy for language relating to vandalism and tenant damage. They may also want to get in touch with their insurance agent to ask how the company handles acts of vandalism carried out by a tenant. Each company may have a different vandalism insurance definition when it comes to tenant damage.

Landlords will also want to be aware that their insurance will not pay for maintenance or to repair damage resulting from normal wear and tear.

The responsibility of routine maintenance and upkeep of a rental property typically falls upon the landlord. Lease agreements often require landlords to provide regular maintenance to keep the property in good condition, including scheduling HVAC tune-ups, hiring technicians to repair broken appliances, and calling exterminators to deal with a pest infestation. Landlords may also choose to take on some of this work themselves if they have the skills and experience to make repairs around the property.

A rental property will inevitably face some damage due to normal wear and tear, even with a diligent landlord and respectful tenants. For example, refrigerators may lose their cooling capacity over time, requiring repairs, installation of new components, or a full replacement. Landlord insurance will not pay for that damage, meaning property owners will need to cover repair costs entirely out of pocket. That being said, home warranties can help pay to fix or replace home systems and appliances that malfunction as a result of age or wear and tear. Landlords interested in more comprehensive coverage may want to consider some of the policy options available with the best home warranty companies in their state (top companies include American Home Shield and AFC Home Club).

Landlord insurance may pay for repairs and even compensate policyholders for lost rental income if the property is left uninhabitable after a covered loss.

If a covered loss leaves a rental property uninhabitable to tenants, the landlord may worry about the cost of repairs—plus the lost income from not being able to rent out the property. Landlord insurance coverage often includes loss of use protection for policyholders in these scenarios. Loss of rental income insurance helps landlords recoup lost rental income if the property is left uninhabitable following a covered peril or accident. This coverage may extend to damage caused by tenants as well. For instance, if a tenant were to accidentally start a fire in their apartment, causing significant damage to the unit and requiring extensive repairs, the landlord’s insurance may provide financial assistance to offset any lost income while the unit is vacant. If the tenant has their own insurance policy covering loss of use, renters insurance would likely pay for some of their additional living expenses, such as hotel stays and eating meals at restaurants.

Even with its limitations regarding tenant damage, landlord insurance still offers robust protection against a wide range of covered perils and liabilities.

Landlord insurance coverage can be fairly limited when it comes to tenant damage; policies only pay out claims in certain situations involving sudden and accidental damage. Despite those limitations, landlord insurance can provide vital financial protection in the event of a covered loss. As noted by the Insurance Information Institute, landlords who rent out property to tenants for a long period of time will likely need landlord insurance as standard homeowners insurance will not cover rental properties. In addition, mortgage companies typically require borrowers to insure their properties, including landlords who have a mortgage for a rental property. Landlords who own their rental properties outright are not required to have landlord insurance, but it’s a good idea anyway. In general, the cost of landlord insurance is a small price to pay for the protection and peace of mind it can provide.

In addition to protecting against unintentional tenant damage, maintaining a landlord insurance policy is the best way for landlords to protect their property from storms, vandalism, burst pipes, and other perils that could lead to expensive repair bills. This type of insurance also includes liability protection in the event the policyholder is found liable for damage or injuries to a third party—a hired contractor falling down the stairs and breaking an arm, for instance. Liability insurance can help pay for medical bills, legal fees, and other expenses resulting from that kind of scenario. Landlord insurance helps reduce the risk of financial loss so property owners can continue turning a profit on their rental property. As such, property owners may find that they need landlord insurance regardless of any limitations related to tenant damage.