Maybe you own a condo in Tucson that you lease to young professionals. Or perhaps you own a duplex in Phoenix that you rent out to students at Grand Canyon University. Regardless, if you own a property that is occupied by tenants, you can benefit from having landlord insurance.
Independent agents can provide you with customized quotes from some of the best landlord insurance companies in Arizona. That way, you can be sure you are getting the coverage you need at the most competitive price. Contact an insurance agent near you to get started.
What Is Landlord Insurance and How Much Does It Cost in Arizona?
Landlord insurance is a specialized type of homeowners insurance policy that is designed to meet the specific coverage needs of property owners who lease to tenants.
On average, landlords in the US spend about $1,083 a year on their landlord insurance policies. Of course, a small apartment will cost less to insure than an entire house, so a lot depends on the property you are covering. Factors that can influence rates include:
- The type of property you own and its size in square feet
- Your expected monthly rental revenues
- The crime rate and weather risks where your property is located
- The number of tenants you have occupying the home
- Your claims history
In general, you can expect your landlord insurance to cost about 15% to 25% more than if you were covering the same property with a traditional home insurance policy. This is because when your property is occupied by renters, you have higher liability and property damage risks.
Is Landlord Insurance Required in Arizona?
Whether or not you have to purchase a landlord insurance policy depends on how you use your property and which insurance company you use.
- If you have tenants occupying your property for 30 continuous days or longer, most homeowners insurance companies will require you to carry landlord insurance instead of homeowners insurance.
- If you have occasional tenants staying in your home for short-term rentals, your home insurance provider may allow you to add an endorsement to your policy that will provide you with suitable coverage.
- If you frequently rent out your property to short-term tenants, such as if you have it listed on Airbnb or VRBO, you may not be able to cover it with home insurance or landlord insurance. Instead, your property will be considered a business, and you will need to purchase commercial insurance coverage.
If you are not sure about how to appropriately cover your particular rental property, you can consult a financial advisor or ask a local insurance professional.
What Kinds of Property Damage Does Arizona Landlord Insurance Cover?
With traditional home insurance policies, the contents coverage amount is usually about 75% of the dwelling coverage. However, as a landlord, your contents coverage needs are lower. This is because your tenants need to cover their own personal property with a renters insurance policy.
You will only need to cover the structure of the house and any of the property inside it that is owned by you. This can include fixtures, appliances, flooring, and any furniture you may provide.
Your landlord insurance policy can cover your property against damage caused by most of the hazards you are likely to face as a property owner in Arizona. These include:
- Severe weather events such as thunderstorms, windstorms, monsoons (but not the flooding they may cause), dust storms, and hail
- Fires, whether they are caused by wildfires or they are accidental fires started by tenants, are due to faulty wiring, or originate in a neighboring unit
- Accidental damage caused by tenants, as might happen when they are moving furniture or if they break a window while installing a portable air conditioner
As with all insurance policies, landlord insurance has some limitations. Your policy will not cover:
- Flood damage: This isn't covered even if the flood is the direct result of a covered storm. To be covered, you will need to supplement your landlord insurance policy with a flood insurance policy.
- Intentional damage caused by tenants: Sometimes tenants act badly out of spite or in retaliation for an eviction notice. If they damage your property on purpose, most landlord insurance policies will not provide coverage. You will instead need to sue the tenant to get compensation.
- Normal wear and tear: Things break. Unless they broke because of a covered event, your landlord insurance policy will not cover them. If the refrigerator in your rental property suddenly stops working or if the hot water tank fails, you will need to cover repair or replacement costs on your own.
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Why Do Arizona Landlords Need Liability Insurance?
Landlords have a high risk of facing a liability lawsuit. This is one of the reasons why having insurance is so important.
Landlord liability insurance, which is a standard part of every landlord insurance policy, is designed to cover expenses like court costs, legal defense fees, mediation costs, settlements, and judgements if you are sued for a covered event.
Landlords are responsible for maintaining their properties, but sometimes when things break, your tenants may not let you know right away. At other times, problems can arise without anyone being aware of them, such as if there is a carbon monoxide leak.
If one of your tenants or their guests is injured in the home and it can be attributed to negligence of upkeep on your part, you can be sued. Fortunately, your liability insurance has you covered.
If you want to have even more liability coverage than your landlord insurance policy can provide, you can also purchase an umbrella insurance policy.
How Does Loss of Income Coverage Help Arizona Landlords?
Most insurers include loss of income insurance as a standard part of their landlord insurance coverage. Others may require you to purchase it as an endorsement if you want to have it.
Landlord loss of income insurance is similar to business interruption insurance. It is designed to cover your rental income losses if your property is severely damaged by a covered event, like a fire, and you are unable to have tenants living in it until repairs are made.
What Else Can Arizona Landlord Insurance Cover?
Some insurance companies will offer a few coverage options that you can opt to include in your landlord insurance policy, such as:
- Non-occupied dwelling coverage: This provides coverage during the times that your rental property is vacant. Many insurance companies will not honor claims for damage that occurred in a home that had been vacant for more than 30 days unless the landlord carries this optional coverage.
- Building code coverage: This is most beneficial if you own an older property. Building codes may have changed since it was built, so if it is damaged, contractors doing repairs may identify additional renovations that are necessary to bring it up to code. This insurance can cover these unexpected extra costs.
- Guaranteed income coverage: This offers you some protection if a tenant fails to make rent payments. Your policy can cover the revenue losses for a set period of time, which is typically long enough for you to complete the eviction process. Rates are based mainly on how much you are charging in rent and the creditworthiness of your renters.
Make sure that you are aware of the various coverage options available to you as a landlord in Arizona so that you can be sure you are getting all the coverage you need for your investment property to remain lucrative.
How Can Independent Agents Help Landlords Find the Best Insurance in Arizona?
If you want to be sure that you are getting your landlord insurance at a great price, you will need to do some comparison shopping. Independent insurance agents in Arizona can save you time and money by doing this on your behalf.
In addition to obtaining customized quotes from a few of the area’s best insurance providers, these agents can offer guidance and advice, answer your coverage-related questions, and help you with any other insurance coverage needs you may have.
It doesn’t cost anything to consult one of these local professionals. Find an independent insurance agent near you to learn more.