It's every landlord's worst nightmare. Your tenants move out and instead of finding your property in good condition, you discover your tenants trashed your property.
Whether intentionally or through wear and tear, your tenants caused thousands of dollars of damages. You now have to deal with fixing up your property on top of finding new tenants.
Your first thought may be: Can landlord insurance help me pay for the repairs?
We hate to be the bearer of bad news, but unfortunately, many landlord insurance policies don’t cover tenant damages. The good news is there are other ways to pay for tenant damages. We’ll cover that and what tenant damages are (and aren’t) covered by landlord insurance in this post.
Let’s start with a look at the different types of tenant damages.
Tenant damages fall into three main categories — accidental, intentional, and wear and tear. Landlord insurance usually only covers accidental damages. Here’s a closer look at each type of tenant damage.
If a tenant accidentally damages your property, such as starting a grease fire or causing pipes to freeze, landlord insurance will likely cover it.
What accidental tenant damage is covered depends on your landlord insurance policy.
Unlike accidental damage, intentional tenant damage is caused on purpose. From spray paint graffiti, to smashed walls, broken doors, and more, an angry tenant can cause a lot of damage to your property.
Many landlord policies don’t cover intentional tenant damages. If your tenant intentionally damages your property, you can potentially cover the damages with the security deposit. In extreme cases, you can also sue your tenant for the damage.
Wear and tear damage is the most common type of tenant damage. Even the best tenants can cause damage to your floors, walls, appliances, counters, and more from everyday life. With the right tenants, you can minimize this damage. But, you probably can’t avoid it altogether.
Like maintenance issues, landlord insurance doesn’t cover wear and tear tenant damages. Instead, you can often use the security deposit to fix any of these damages.
If your property has intentional or wear and tear damage, you can’t pay for the damages with an insurance claim. This doesn't mean you have to pay for the damages out of pocket either.
Instead, you can first use the security deposit to repair tenant damages. If tenants only left wear and tear damage, hopefully the security deposit will cover everything. Before using the security deposit to pay for damages, be sure to check your local rent laws. Many states have strict laws and procedures landlords need to follow when keeping the security deposit.
The security deposit may not completely cover intentional damages. There are two options if that’s the case. You can either pay for the rest of the damages yourself. Or, you can sue your tenant for the damages. This legal process can be time-consuming and expensive, so it should be a last resort.
Most tenants who intentionally damage your property will take off after causing the damage. However, some will stay on your property to continue causing damage. If this is the case, you need to get the tenants out of your property.
You can’t just kick out tenants though, as this violates your lease and rental laws. Instead, you need to evict your tenants. This involves filing the right paperwork and going before a judge. If you need to evict your tenant, it’s a smart idea to work with a lawyer. That way, you can resolve the issue as quickly as possible –— without getting into legal trouble.
Depending on your policy, landlord insurance will usually cover accidental tenant damage. But, if tenants cause so much intentional or wear and tear damage to your property that you can’t rent it out, landlord insurance could help.
If you have loss of rental income coverage, your landlord insurance could reimburse you for rent while you’re repairing your property. You’ll still have to pay for damages yourself or with a security deposit. But, you won’t have to worry about the lost rent during repairs.
Landlord insurance covers accidental damage and many natural disasters that can damage your property. So if your landlord insurance covers damage to the structure, does it cover tenant belongings that were also damaged?
Nope, it doesn’t. That’s why your tenants need renter’s insurance. Landlord insurance only covers the structure and your liability. Depending on your policy, you can also add coverage for other structures on your property and loss of rental income coverage. Because landlord insurance is designed to protect you, it doesn’t cover any tenant belongings.
The best solution to tenant damages is preventing them in the first place.
To prevent intentional tenant damages, you need to meticulously screen potential tenants. This can help you weed out any tenants who have caused damage elsewhere. By thoroughly screening tenants, you can choose tenants who have a great rental history. This rigorous screening significantly decreases the risk of intentional tenant damages.
For wear and tear damages, you should inform tenants of repair costs. You can usually put the security deposit towards wear and tear damages. If it doesn’t completely cover the damage, you can bill tenants for the remaining cost. Tenants will be more motivated to take care of your property if they know how much they’ll have to pay for any damages.
While landlord insurance doesn’t cover all tenant damages, it can protect you and your property from events like:
• Freezing pipes
• And more
Plus, landlord insurance covers accidental damages and can help make up for lost rent from tenant damages. It's important to choose the right landlord insurance to get the correct coverage. Check out our guide to DP1 and DP3 policies to learn more about different types of landlord insurance.
Once you figure out what type of landlord insurance you might need, it’s time to get a quote. With Obie’s fast, transparent, and completely online process, you submit a quote request in minutes.