Landlord Dwelling Insurance in Raleigh-Durham, North Carolina

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The Basics of Landlord Dwelling Insurance

Understanding Insurance Needs for Landlords in Raleigh, North Carolina

Landlord Dwelling Insurance in Raleigh-Durham, North Carolina, covers properties like homes, apartments, or townhouses rented out to a tenant. Although subletting can be an excellent source of extra income, it is more complex than simply putting your home on the market. The added risks and liabilities associated with letting strangers live on your property make it more difficult. Therefore, special insurance is required to cover damages sustained during this time.

While not required by North Carolina law, landlord insurance is deeply important and may protect your livelihood against structural damage or a personal liability suit. The value of good insurance should not be underestimated because it could be the difference between a minor inconvenience and a financial nightmare. Tenants are rarely held responsible for significant appliance malfunctions like HVAC equipment or injuries that occur through no fault of their own. Relying on their renters’ insurance or, even worse, your homeowners’ insurance policy to cover the damage is a grave mistake that will likely end in monetary and legal distress.

Landlord dwelling insurance has the potential to be pricey because agencies take on greater risk when dealing with renters. Still, several factors affect your rate and include ways to bring it down.

Among the factors that determine your premium are the following:

  • Age and Building Conditions
  • Number of Units
  • Location
  • High-Risk Features, such as a wood fireplace or pool
  • High-Risk Tenants like those looking for short-term leases

Additionally, you can often bring down your premium rate by:

  • Installing Security Features
  • Smart Home Devices that warn you about trouble
  • Keeping Safety Equipment on Hand

Does Your Policy Have You Covered?

What Is and Is Not Covered by Landlord Dwelling Insurance

Knowing what your contract does and does not cover with any insurance policy is crucial. However, with landlord dwelling insurance, it is essential to understand what you are responsible for and what falls under the tenant’s responsibility.

Dwelling insurance includes property damage, lost income or rental default coverage, and liability protection.

Property Damage insurance covers damage to the structure of a building caused by certain risks and perils not excluded from your contract. It typically includes fire, lightning, appliance malfunctions, or irresponsible tenants. When choosing a plan, consider whether the payouts evaluate actual cash value or replacement cost.

Actual Cash Value payouts are distributed based on what materials are worth today, after depreciation– meaning, if you purchased the best roof available in 2013 but are filing a claim in 2023, you will not be reimbursed for its original value. Instead, your payout relies on its value in 2023 after ten years of use. This may prevent you from replacing items with those of similar quality. Replacement cost, on the other hand, grants you a payout equal to the item’s value at purchase, meaning you receive the full amount back and can easily replace an item with one of similar quality and value.

Lost Income or Rental Default Coverage covers rent you may lose out on if the building becomes uninhabitable due to a covered peril. It provides temporary rental reimbursement while the building is in repair so that you can maintain vital income.

Please note this does not cover renters that default on payments. However, you can add additional coverage to supplement this loss as well.

Liability Protection covers you if someone, either a resident or a visitor, hurts themselves while on your property. Without this coverage, you may be liable for any property negligence injuries.

These three aspects of coverage make up the baseline of protection. Various levels of protection award more coverage at a higher cost. You may also purchase addons that can further extend your policy’s reach.

What Makes a Landlord Dwelling Insurance Policy

Various Dwelling Insurance Agreements and Extending Your Coverage

Three levels of coverage exist in terms of landlord dwelling insurance. They are called DP-1, DP-2, and DP-3 ( DP standing for dweller policy.) The main differences are how the insured receives payout and what is covered.

DP-1 policies cover the bare minimum when it comes to dwelling insurance. It is a named peril policy meaning it only covers events named explicitly in your contract, and you must be able to prove that said event caused the damage. There are nine perils covered under this policy:

  • Fire and Smoke
  • Lightning and Storms
  • Hail
  • Windstorms
  • Civil Unrest
  • Volcanic Eruptions
  • Explosions
  • Vehicles
  • Aircrafts

Nothing else applies under this policy. Additionally, the payout relies on an actual cash value system meaning even if you have a claim, it may not be enough to cover the damage.

DP-2 policies, unlike DP-1, are replacement cost-based contracts that provide payouts based on what an item or material was worth at the time of purchase rather than the time of claim.

However, similar to the previous policy, DP-2 represents a named peril contract, the difference being an extended list of covered events. Additional perils may include:

  • Falling Objects
  • Freezing Pipes
  • Collapse
  • Snow and Ice
  • Vandalism

For a complete list of the new covered perils, it would be best to speak with a Barber Insurance agent.

DP-3 policies are the most comprehensive landlord dwelling insurance contract you can get without adding additional coverage. They operate on a replacement cost basis, so replacing damaged items is simple. Additionally, it is an open peril contract, which covers everything not explicitly excluded in the agreement. Specific exclusions vary among locations, so it would be best to talk directly with a Barber Insurance agent. However, with this policy, you can rest assured that you have coverage in most situations.

Still, there may be risks in your area that need extra coverage. In that case, you can add individual policies, called riders, extending your range into areas you need most. Beneficial riders to consider would include:

  • Guaranteed Income Insurance covers you if a tenant falls short on rent or fails to pay altogether.
  • Flood or Earthquake Insurance, depending on your location
  • Additional Construction Expenses will aid in bringing a building up to code.

Many different riders exist in landlord dwelling insurance, so you should speak with a trusted Barber Insurance agent for more information specific to your situation.

Landlord dwelling insurance policy
Landlord couple standing in front of rental home

Frequently Asked Questions

Everything you need to know about Landlord Dwelling Insurance

Below are some of the most common questions we receive regarding landlord insurance.

Yes! Landlord insurance is tax deductible because the IRS considers it a regular business expense.

There are no legal requirements that enforce renters’ insurance. However, making it a leasing requirement relieves you of the financial and legal risks that come with damage and injury.

Tenants with insurance are responsible for their property and space without the need to involve your insurance policy. Therefore, it ensures that all your bases are covered when something unexpected occurs.

Homeowners insurance and landlord dwelling insurance are very different things. Your homeowners’ policy only covers a residence in which the owner of the policy currently lives. The distinction comes because the two contracts support different needs. Unknown tenants introduce new risks. Landlords need policies that emphasize structural coverage and personal liability protection since they have less control over what takes place in the dwelling. Additionally, dwelling insurance does not require personal property coverage, as that is the tenant’s responsibility, but may benefit from extended coverage on maintenance equipment.

A landlord must exhibit negligence in maintaining the property to be held liable for an injury. The case must prove that a solution was possible, that the property owner failed to rectify the situation despite previous warnings, and that the injury outcome was foreseeable. Additionally, the person making a claim must be genuinely hurt directly due to negligence.

Have more questions? Schedule a consultation with one of our Barber Insurance agents and find out how we can help.

Trusted Agency for Landlord Dwelling Insurance in Raleigh, NC

Experienced, Knowledgeable, Helpful is The Barber Insurance Way

Barber Insurance Agency has been serving Wake County for more than 20 years. It is our joy and pleasure to educate property owners on their rights and responsibilities as landlords. We are teachers first and insurance agents second. You can rest assured that with Barber Insurance on your side, landlord dwelling insurance is easy. Raleigh, North Carolina, is our home, meaning we are innately aware of its insurance needs. Known in the community as experienced, knowledgeable, and genuinely helpful, we are committed to providing the best insurance experience possible. 

Speak with a Barber Insurance agent today and find out how true confidence in your insurance agency feels.

Landlord working with tenant on agreement