Landlord insurance

Landlord insurance is a policy for the person who owns the rental. It usually covers the building if it is damaged by an event such as fire, and it covers the owner's liability if someone is hurt on the property. Many policies can also cover lost rent after a covered loss. Terms differ by insurer, so read the policy.

A tenant's renters insurance is different. It covers the tenant's belongings and the tenant's own liability, not your building. A standard homeowner policy may not fit a rental either, so tell your insurer when you rent the home. Ask what the policy excludes, what the deductible is and whether it pays for vacancy.

Insurance is one of the largest ongoing costs, so include it when you work out net operating income. It also shapes your cash flow in a bad year. Our guide to rental property insurance lists questions to ask an agent before you buy.