Does Umbrella Insurance Cover Rental Property? Here’s A Comprehensive Analysis

As a landlord, you must consider your family’s safety and security as well as the security of all your rental properties, your tenants, and any potential liabilities.

This is where umbrella insurance becomes useful. However, it might be a little confusing to know which liabilities are covered and which are not.

Umbrella Insurance For Rental Property
Does Umbrella Insurance cover rental property. Image Courtesy (alpha-insure.com)

This blog will help dispel the mystery surrounding umbrella insurance rental property and provide a better understanding of what it is.

What Is Umbrella Insurance?

An umbrella insurance policy is like an ‘umbrella’ term, covering a wide range of liabilities with higher coverage than standard policies.

Also read: Are Life Insurance proceeds marital property

It includes third-party damages for auto accidents, medical bills for injuries on your property, and various other liabilities such as legal expenses, false arrest, libel/slander, dog bites, and volunteering responsibilities.

The minimum coverage amount is usually $1 million.

What Is Covered Under Umbrella Insurance

Umbrella Insurance
Does umbrella insurance cover rental property: Image courtesy (alpha-isnure.com)

In the following scenarios, having umbrella insurance as a landlord may put you at ease:

  • Injury to your renters or visitors in public spaces on your property, like a gym, patio, or stairway.
  • Injury to a third party on your unoccupied rental property, mainly local children.
  • A third party suing you for damage your tenants may have caused.
  • Enduring a privacy invasion lawsuit from your renters.
  • Paying for legal defense if you are sued for any of the causes or more.

What is Not Covered Under Umbrella Insurance

Your umbrella insurance won’t protect you from any liability if you manage your rental homes as a business or LLC.

In this situation, you also need business liability insurance in addition to your umbrella policy.

However, if you manage several properties as part of your business and would like to receive higher liability coverages, you can choose to opt for an umbrella add-on policy to your standard landlord insurance, which shall help cover all your liabilities.

How Much Umbrella Insurance Do I Need?

Umbrella Insurance
Does umbrella insurance cover rental property: Image courtesy (alpha-insure.com)

Consider purchasing an umbrella policy for your assets. It starts at $1 million and can go up to $5 or $10 million.

Despite the cost, it provides a significant liability cushion for multiple properties, outweighing the initial investment.

Below is a video that explains in details about Umbrella Insurance:

 

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