Having a home or other property is likely the biggest investment you will ever make. To help protect this investment, you’ll have insurance coverage.
This vital protection can give you peace of mind and provide financial backing. One advantage of owning property is that its value can grow through equity.
However, some people reap immediate financial benefits by renting out the property to tenants.
In such cases, insuring it is no less important. To do so, you’ll need to purchase landlord insurance in Illinois.
This coverage works much like your homeowner’s policy but must be a separate plan specifically for rental purposes.
It’s important to know how this coverage works and why you need it.
What You Can Use It For
One of the nice aspects of landlord insurance in Illinois is that it’s flexible and can apply to various types of property.
This insurance covers the dwelling, personal property, and other structures on the property. You can purchase a policy for your home, apartment, condominium, townhome, or vacation cottage.
Why Have A Policy
Some people may question the need to purchase landlord insurance. After all, you already have a homeowner’s plan.
Unfortunately, this policy applies only to owner-occupied property. Once you no longer reside in the dwelling and rent it out to another tenant, your homeowner’s policy will no longer be valid for issues that occur in the home and on the property.
For example, if a renter is injured on the premises, an appliance stops working, there is vandalism or theft, or the home is destroyed by fire, you could face disastrous financial consequences.
The good news is that with landlord insurance, these types of perils and problems are covered.
What The Insurance Covers
Good landlord insurance policies have comprehensive coverage. You can find a plan that addresses your needs and concerns.
The insurance will cover property damage that occurs when other tenants are occupying your home.
This could be due to disasters like a fire or earthquake, or it could be because of something deliberate such as vandalism.
If you have unruly tenants who cause damage due to neglect or irresponsible behavior, the policy will cover repairs or replacement costs.
The policy will also cover damage that may result from issues with the electrical and gas systems.
Liability protection is another critical component of landlord insurance in Illinois.
This part of the policy will pay for the medical costs that the tenants or visitors need from an accident or injury that happens on the property.
If anyone in the home or on the property gets hurt due to a property issue, the policy covers medical care and treatment, hospitalizations and doctor’s office visits, and the recovery that follows.
In addition, if the tenant or visitor pursues legal action and sues you, landlord insurance protects you by paying for your legal costs.
Another facet of this insurance helps if you suffer a loss of income due to the property being uninhabited.
Importantly, this must be because something makes it impossible or unsafe for someone to live there.
An example could be the discovery of mold, an infestation of termites or rodents, or the appearance of a sinkhole on the property.
In these cases, you could face a significant drop in cash flow due to tenants not renting your home.
The insurance will reimburse you for the money you would have made had tenants been able to live in the dwelling.
What Doesn’t Fall Under The Coverage
Much like your regular homeowner’s policy, landlord insurance doesn’t cover everything that could arise on the property while tenants are renting it.
First, if a renter’s personal belongings are damaged or destroyed in an accident or due to another incident, the policy won’t pay for replacement or repairs.
To cover personal property, a tenant would need a renter’s insurance plan.
Typically, mudslides, flooding from a sewer backup, erosion, and volcanic activity are not covered.
A landlord insurance policy will also not apply to acts of war or asbestos removal.
If damage occurs on the property because of your neglect or deliberate actions, your policy will not pay to fix it.
Purchasing Additional Coverage
On the other hand, it is possible to buy supplemental plans along with landlord insurance in Illinois. These policies can help to address other concerns.
Separate flood insurance is available to cover water damage that occurs if a sewer or drain backs up when renters live in your home, You can also buy a policy to pay for debris removal or the collapse of your property.
Factors That Affect the Costs
Landlord insurance policies can vary widely in cost due to different factors.
One factor is the age of the home. Older homes cost more to insure than newer ones, for example.
You’ll also want to consider the location of your property. Expect to pay more for a policy if your property is near or in a flood zone or if it’s in a higher-priced area.
The size of the dwelling and property will also affect how much you pay for your policy.
You will also have a deductible with your plan. If you have higher deductibles, the premium is less; however, lower deductibles come with more expensive premiums.
If you decide to rent out your place for a short term, such as during the summer for vacationers, you will likely pay more for the policy.
Plans are less expensive if you have tenants in your home for a long period or throughout most or all of the year.
It’s clear that having a landlord insurance policy in Illinois is valuable in protecting your investment.
Though having such insurance coverage is not required by law, it makes financial sense.
When you purchase an insurance policy for your rental property, you can rest easy knowing you and your tenants have protection.