Whether it’s your side hustle or your primary occupation, renting out property can be a fantastic way to earn an income in California. At the same time, property management comes with some major risks. To control those risks, you need the best landlord insurance in California.
What is landlord insurance?
Landlord insurance refers to insurance policies that are designed to meet the needs of people or companies that own and rent out property. These policies typically cover property damage, for example, if a fire or storm damages the building. Landlord insurance also typically provides liability protection in case the landlord is sued by a third party, for example, if a visitor is injured on the property and files a lawsuit.
Who needs landlord insurance?
Landlord insurance is a smart investment for anyone who rents out property. This is true whether you have a single property or you own multiple buildings.
California state and local laws may not require landlord insurance. However, just as mortgage lenders typically require homeowners to purchase homeowners insurance, banks may require insurance for landlords.
Can a landlord require renters insurance in California?
In California, landlords can require their tenants to carry renters insurance, but there are some restrictions and requirements.
According to the California Department of Real Estate, many landlords require tenants to carry renters insurance, including liability insurance. This is because a tenant may cause damage to property, for example, by accidently leaving on a portable heater and starting a fire. Landlords may also require that tenants obtain coverage for certain risks, such as having pets or a waterbed. However, a landlord may not be able to evict a tenant for failing to maintain renters insurance to cover their own possessions.
Landlords who want to require renters insurance should put this requirement in the lease, including the minimum coverage amount. Whether or not landlords require renters insurance, it’s smart to educate tenants on why this coverage is important. Renters may think that they don’t need insurance because their landlord has insurance, but this is not true. The landlord’s insurance covers the landlord’s property and liability. It does not cover the tenant’s personal property or liability.
Special considerations for California
In any state, landlords should be aware of risks involving accidents, crime and natural disasters. However, in California, certain risks are elevated.
According to the United States Geological Survey (USGS), California and Alaska have the greatest number of naturally occurring earthquakes, but California has more earthquakes that result in damage than any other state.
Wildfire is another major threat in California. According to the Congressional Research Service, the East actually has a greater number of wildfires, but wildfires in the West tend to be larger and burn more land. In 2021, more than 23,000 wildfires burned approximately 6.2 million acres in western states. Wildfires can also create post-fire landslide hazards, according to the USGS.
Fire is typically covered by property insurance policies. However, landlords should review their policies for any restrictions or exclusions. The Wall Street Journal says that some insurance companies have been cutting back on coverage in California because of the wildfire risk and related regulatory issues.
Earthquake insurance is not typically included in a standard property insurance policy, so landlords may want to purchase additional coverage for this risk. Likewise, standard property insurance policies also typically exclude landslides, mudflows and floods, so landlords may wish to purchase additional coverage for these risks.
Being a landlord in California
Unlike most states, California has statewide rent control rules. These laws first went into effect in the 1970s, and they were updated by the California Tenant Protection Act of 2019. Because of these laws, landlords may be prohibited from increasing rent in an amount that is seen as egregious. However, some properties are exempt from the state rent control caps.
California also has a number of other local landlord-tenant laws. These laws cover everything from how much landlords can require as a security deposit to when landlords can enter the unit. Other laws include rules on the process that landlords need to follow when evicting tenants and the disclosures that landlords need to make.
In addition to state and local laws, California landlords also need to follow relevant federal laws, including the Fair House Act anti-discrimination rules.
Honeycomb's landlord is tailored to California
Honeycomb's landlord insurance is available in California. We offer coverage that includes the following:
- Landlord property protection. If your property is damaged by a covered peril, such as fire, hail or wind, your policy will help pay for repairs. This coverage helps landlords deal with unexpected reconstruction costs.
- Loss of business income. Even with insurance, repairs can take a while after a disaster. In the meantime, you may not be able to earn rental income. You may also have to rehome your tenants. Loss of use coverage helps cover lost rent and rehoming costs.
- Landlord liability protection. If you’re sued, your policy can help cover third-party damages, including defense costs and court.
- Medical payments if an injury occurs in your rental property, either to the tenant or a guest of the tenant. Medical payments coverage helps pay the resulting medical bills.
To see how much landlord insurance in California will cost for your property, you can get a quote online in less than 5 minutes here. Our customers typically save around 40% on their landlord insurance.