Landlords Navigating the Insurance Minefield

Property owners are especially vulnerable to insurance claims denial in today’s real estate investing market. A property owner failed to report a vacancy to their insurer and was denied coverage for a loss.


“A rental property sustained a $20,000 loss. The insurer denied the claim, referencing a clause stating the vacancy cannot be more than 30 days. After investigation the insurer found that electric service had been removed from the tenants name beyond the 30 day clause. The property manager was not notified nor was the owner.”

Rental property insurance provides protection from multiple perils for landlords. In our current economic environment real estate investors must be diligent in securing appropriate coverage for their particular strategy. Property managers are coming under fire for being liable for the oversights and gaps in coverage. If a particular property is covered under a blanket policy there tends to be “built in” coverage for this type of incident above. However this is only one of many issues investors and property manager’s face when insuring multiple locations.


The owner of an apartment building sustained loss when a parked tow truck rolled down the hill and struck the building. Since the building was 35 years old and a commercial structure all work was required to be brought up to code. Additionally the aid of a structural engineer to determine the integrity of the remainder of the building was required. The tow company’s insurer advised that, due to the age of the building, the new code requirements are not part of the claim. Only the depreciated value of the repairs was paid, not the actual cost to repair.

The property owner failed to add ordinance protection to the policy which left them short on repairs to the structure. A landlord blanket policy or the landlord dwelling policy must be structured correctly to protect property owner’s extensive investments as well as their liability exposure which we have not yet address. Look for the landlord’s property liability in our next installment.

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