Does Landlord Insurance Cover Damage Caused by Tenants and Squatters?

Landlord insurance may cover repair costs after your rental property or belongings are damaged by a tenant or squatter, although this depends on the type of damage and the details of your policy. In general, sudden and accidental damage is likely to be covered but coverage may be limited for certain types of intentional damage.

Continue reading to learn more about how landlord insurance covers tenant damage including what perils are covered and what exclusions are likely to apply.

On This Page

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  What Types of Damage Does Landlord Insurance Cover?

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  When Won’t Landlord Insurance Cover Damage Caused by Tenants or Squatters?

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  When To Consider Additional Coverage as a Landlord

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  FAQs

What Types of Damage Does Landlord Insurance Cover?

A DP-2 landlord insurance policy may insure the structure of your rental property and any belongings you store on the property against up to 18 named perils. While the lineup of covered perils is not uniform across all policies, you can generally expect your policy to cover most or all of the following perils:^[1]

Meanwhile, if you opt for a DP-3 policy, will instead receive coverage on an open peril basis.^[2] This means your insurance company will cover damage from any peril that isn’t specifically excluded by your policy. While coverage often applies to external sources of damage, it can also apply to damage caused by people inside of the rental unit as explained in the sections below.

Does Landlord Insurance Cover Tenant Damage?

Your landlord insurance policy may cover sudden and accidental property damage your tenant is responsible for such as damage from a tenant backing their car into the garage door or an accidental fire caused by a tenant while they are cooking.

In addition, landlord insurance policies typically include fair rental value coverage that can make up for lost rent payments if the home experiences damage that is so severe that your tenant can no longer stay there.^[1] For example, this portion of your policy might kick in if you and your tenant agree to terminate the lease after a kitchen fire and you can’t let anyone else move into the home until after it has been repaired or rebuilt.

Does Landlord Insurance Cover Squatter Damage?

It’s possible that your insurance provider may consider a squatter to be a burglar since burglary refers to the act of entering a building illegally with the intention of committing a crime and squatting refers to the act of moving into a house with the intention of illegally staying there. As a result, your landlord insurance policy should cover damage caused by a squatter as long as burglary is included among the perils it covers.

For example, if you discover a significant amount of water damage before showing a recently vacated apartment to a prospective lessee, your insurance carrier may cover the damage if security camera footage reveals that it was caused by a squatter who left the bathroom sink running.

While few insurers offer dedicated squatter coverage, it is worth noting that Proper Insurance sells Airbnb insurance policies that include coverage for lost income and legal expenses that arise while you are in the process of trying to evict a squatter.^[3]

When Won’t Landlord Insurance Cover Damage Caused by Tenants or Squatters?

While landlord policies may cover damage from outside vandals and burglars that break in while your rental property is inhabited, many of them exclude coverage for vandalism committed by tenants and burglary of a vacant property.^[4][5] As a result, you may not be covered if a disgruntled tenant smashes several windows after receiving an eviction notice or if a squatter takes up residence in a house you own after you go several months without renting it out.

In addition, theft isn’t one of the named perils commonly covered by DP-2 insurance, so your insurer may not reimburse you if a tenant steals any of your belongings.

You should also note that insurance generally covers sudden perils rather than gradual losses, so any damage that can be attributed to wear and tear or poor maintenance on either your part or your tenants’ parts likely won’t be covered.

Finally, you should remember that landlord insurance won’t cover a tenant’s personal property. For this reason, your tenants will need to purchase renters insurance in case they accidentally cause a sudden peril like a fire that damages their belongings or their possessions are damaged or stolen by an intruder.

When To Consider Additional Coverage as a Landlord

Although coverage for vandalism and burglary can be limited depending on the details of your policy, some landlord insurance companies offer additional vandalism and burglary coverage endorsements that you can purchase for more comprehensive protection against intentional damages caused by a tenant or squatter.^[5]

Should I Get Additional Insurance if My Home Is Not Occupied?

Most landlord policies include a vacancy clause that reduces coverage for a home that has been uninhabited for 30 to 60 days or more, so you may need to purchase a separate policy if you expect to keep a home vacant for an extended period of time.^[6] Keep in mind that property insurance can be more expensive for unoccupied homes since there is a greater risk that damage from perils like vandalism or burst pipes will go unnoticed.^[7]