Landlord Insurance ?

[Bev Willerby]

Hi
In Australia, we have a "Landlord Insurance" policy that costs approx. $250 p.a. with approx. $200 excess per claim, and covers the Landlord against Malicious Damage & Rent Default.
(A totally seperate policy to the building insurance)

-Is there anything like this in USA?

Malicious Damage caused by the tenant requires a police report. It is very hard to establish at tribunal that the damage was done intentionally with malice and not just out of stupidity:

case example;
tenant brought motorbike into living room to change oil and severly damaged/stained carpet - judge ruled tenant had not set out intentionally to cause damage to the carpet -so this was not covered

on the other hand, different tenant caused offensive graffitti to internal walls -this was ruled to have been done intentionally with malice -so covered

However, this policy comes into its own mainly for rent default, of varrying amounts depending on the circumstances but in some cases upto 12weeks if the tenant does a runner.

You can see the peace of mind $250 can give you.

Is there anything like this available in USA?

[Timothy W.]

Let's start with damage that a tenant intentionally does. Insurance classifies it as "Vandalism/Malicious Mischief" or VMM for short and yes it can be covered if a tenant does it and you can document it was done with malicious intent (usually with a police report). I once proved that damage done by presumably children was not tenant wear/tear but malicious in nature because the kids wrote "F--- YOU!" on the wall. Now, VMM is subject to vacancy clauses and most US policies won't cover VMM if a property has been vacant for a certain period of time (30 days, 60 days, ect...). This depends on the state and the individual carrier you are getting. Some commercial policies exclude VMM outright so you'll need to pay attention.

What is not covered is excessive tenant wear and tear or rent default. I've never seen coverage for it from policies on SFRs to 100+ unit luxury complexes. There is rental reimbursement (typically classified as Business Interruption) IF you are losing rent because of an otherwise covered loss. This only applies to occupied units and typically only applies for the time of actual repairs - not for the time taken to settle the claim or for you to get contractor estimates and wait to get scheduled.