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Landlord Insurance Policy
Fire Insurance or Homeowner's Insurance is suitable for an owner occupied home in California. Once you turn an owner occupied home to a rental property. You need to consider to purchase Landlord Insurance Policy or Rental Property Insurance. Typical landlord insurance policies cover property damage, like fires or storms. They also include liability protection for legal costs if a tenant or guest gets hurt on your premises.
The cost for your Landlord insurance premium depends on the situation and circumstances, like:
- Property condition and the cost of replacement
- Property Usage- Long term tenant vs Airbnb
- Property location
- Preventive features like security alarms
Is Landlord Insurance in California Mandatory? => If you have no mortgage on the home, the answer is No.
As a landlord in California, you can require tenants to purchase renters insurance policy, but there are certain limitations. For example, you can specify types of coverage for property damage or pets but can’t evict tenants for not insuring their personal property. Any renters insurance requirements should be outlined in the lease agreement.
There are three main types of landlord insurance, known as “dwelling policies.” Dwelling coverage will vary based on the standard landlord insurance policy.
1) Dwelling Policy 1 (DP1): Basic Protection
What it Covers: DP1 provides simple coverage limited to nine named perils, including fire and lightning, explosions, windstorms, hail, riots, smoke, aircrafts, vehicles, and volcanic explosions.
Payouts: DP1 pays the actual cash value of a damaged property based on its current condition and depreciation.
Perfect For: Landlords who want to save money and only need minimum coverage.
2) Dwelling Policy 2 (DP2): Average Protection
What It Covers: DP2 covers another nine named perils (18 in total), including electrical damage, water or stream, falling objects, cracking or bulging, glass breakage, burglary, freezing pipes, weight of snow, and collapse.
Payouts: DP2 pays the replacement value to cover the full cost of repairing or replacing the damaged property.
Perfect For: Landlords who need more than basic protection without a ton of extras.
3) Dwelling Policy 3 (DP3): Comprehensive Protection
What It Covers: DP3 is an open peril insurance policy that covers all possible perils except for a small list of exclusions.
Payouts: DP3 pays the replacement cost and includes rent loss coverage and liability protection.
Perfect For: Landlords managing non-owner occupied homes used for residential rental properties.
Reference:
Understanding Landlord Insurance in California: What You Need to Know
Best Rental Property Insurance in California
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