Everything You Need to Know About California Landlord Insurance (2024)

Few markets can match the performance and vibrancy of the California property market. The population is growing steadily, the economy is stable, and the demand for property is at an all-time high. Provided you put your money in the ideal property type, you are bound to enjoy stable returns, appreciation in property value, and also property tax advantages.

To protect your interests in California, landlord insurance comes highly recommended; regardless of the size of your portfolio. What is landlord insurance? How does it work?

In this article, the experienced team from Home Choice Property Management gives key details that will set up every California landlord for success.

National Landlord Insurance Averages

Before we enter the California market, let’s have a look at the national rental market and also the costs of landlord insurance. This will allow us to do a comparative analysis of how California fairs up to competitive markets in the country.

Rental costs in California are relatively high. This can be attributed to the demand for rental space (both commercial and residential), the vibrancy of the real estate industry, and other pertinent factors. The average national rent is $1,372 compared to California’s $1,950.

Therefore, in terms of gross rental income, you can be assured of earning significantly higher. This comparison could even double, depending on which market you are comparing California to.

As for the issue of landlord insurance, you must appreciate that the cost of the insurance policy varies from one market to another, the risk of the property, and the policyholder. From our experience in the market, the cost of landlord insurance varies between $2,000 to $2,300 annually.

California Landlord Insurance: What Is It All About?

Similar to other forms of insurance policies, landlord insurance is established to offer protection to the landlord should there be issues during their property ownership and leasing journey. The insurance covers damage done by tenants during the lease period.

Is There a Difference From Homeowners Insurance?

From our experience in the California property industry, this is a question that we typically experience from time to time. Is there a difference between the homeowners’ insurance and the landlord insurance?

We understand where the confusion can come about; since both insurance policies offer a similar kind of protection. In simple terms, homeowners insurance applies if you are the person occupying the residence.

Landlord insurance, in California, applies where you are the owner but have leased the premises to someone else. Landlord insurance is also a bit more complex since it comes with a higher level of risk.

What does a California Landlord Insurance Policy cover?

A policy varies depending on the company offering the cover and also the pertinent details. However, our team has singled out the most common factors you will find in almost every insurance policy in California:

Dwelling Coverage

Insurance is meant to offer you a significant buffer, especially when the damage is caused by unexpected events. The dwelling coverage is an umbrella term in the landlord insurance that covers all these unexpected events.

Some of the events that are under this cover include storm roof damage, fire damage, third-party vandalism, or snow damage. There could be more events covered under the dwelling coverage depending on the location of the property.

Additional Structures

A property often comes with ancillary facilities that are necessary for the function of the home. This could be a shed, garage, or gazebo. These are covered under the ‘additional structures’ clause in the policy.

Liability Insurance

There is always a possibility of injury to the tenants while they are on your premises. The liability insurance clause is meant to cover medical expenses and other related costs.

This could also apply to workers handling repairs and renovations on your property.

Personal Property

This applies to landlords who offer furnished apartments or residences. You could be providing electronic equipment, furniture, kitchen equipment, fittings, or décor. In such a scenario, this is personal property that will be included in the policy.

What Does a California Landlord Insurance Policy Not Cover?

Tenants’ Property

By their signing of the lease agreement, the tenant will have their belongings and furniture on your premises. In the possibility of a fire or storm, the insurance policy will not cover damage to these assets. The tenant is always advised to have renter insurance to cover such possibilities.

Repair of Equipment and Appliances

In such a competitive market, landlords always want to make repairs on fixtures and fittings to give tenants the best experience. Equipment also has a shelf-life, after which, it would be ideal to replace them.

The insurance will not cover the repair or the replacement of equipment on the property. However, if the equipment is damaged as a result of water, fire, or an unexpected event, the insurance should cover it.

Conclusion

Landlord insurance protects your interest in real estate and also ensures that you have peace as you go about your other personal tasks. Property investment and management requires one to put in a significant amount of time, to manage the needs of the property and also those of the tenants.

For the management of your California rental property, you can rely on the #1 property management team in the region, Home Choice Property Management. Our goal as the leading service provider is to maximize the potential of our client’s property. Using the experience of our professional team, we will help you decrease your expenses and increase your profit margins.

Get in touch with Home Choice Property Management. With over a decade in the Southern California property market, there is no better partner to have by your side.