Landlord insurance. Is it worth it?

6 Replies

I recently became aware that there is such a thing as landlord insurance which, in the event of a deadbeat tenant, will not only pay their rent in the interim, but will also pay for the cost of an attorney throughout the eviction process.  Being in a tenant friendly location of San Jose, California, I am concerned about tenants not paying rent, especially in a non-rent controlled city.  Is this insurance something that I should strongly consider if I own one duplex (owner occupied)? Is this type of insurance expensive? Any insight would be appreciated. 

- Chris

Updated almost 3 years ago

Correction: Sunnyvale, CA. Not San Jose, CA

The term "landlord insurance" is normally used in the same context as "homeowner's insurance".  It does usually have loss of rent coverage that will cover the rent after a fire or other covered peril.  And it will actually pay a claim on a rental where filing a claim under a homeowners policy that is really rented may results in a denial.  You absolutely want that for rentals.

But this sounds like some other sort of insurance that at least claims to cover tenant-induced problems like an eviction.  I would agree this seems like a bad deal.  Insurance in general is a bad deal.  If it wasn't, it wouldn't exist.  Insurance companies make a profit.  That means insurance, like casino gambling, is a negative expectation bet.  The house wins, in the long term.  You buy insurance for the short term, though.  Specifically, some big loss that you cannot cover yourself.  You probably cannot cover the house burning down out of pocket.  Or wrecking your car.  But, as a landlord, you certainly want to be in a position to cover the costs and loss of rent associated with an eviction.

@Account Closed If your really worrIed you could always Take the money that you would give the special landlord insurance company and put it in a savings account each month and then of coarse you also have the tenants security deposit .. if something happens your covered or atleast have a nice padded buffer for evictions ,damage , etc without a big hit and if you don’t need it you still have your little fund for other expenses / updates

Indeed, @Dennis M. I share the same thought. At least I'd get a little interest with a savings account. Last time I checked, the ROI on making donations to an insurance company for over-priced insurance wasn't that good lol